Presidential Intention to Sell State Assets Sparks Controversy in Costa Rica

The intention to sell State assets to pay debts announced by the president of Costa Rica, Rodrigo Chaves, generated surprising reactions in the Central American country and opened a controversy between the Government and the unions that oppose the initiative.

Last Tuesday, President Chaves said during the presentation of his 100-day report that he will present bills to sell the International Bank of Costa Rica (Bicsa) and the Bank of Costa Rica (BCR), as well as 49% of the actions of the state-owned National Insurance Institute (INS). “A key action is the sale of assets such as Bicsa and the BCR, which will give us fresh resources of approximately 2.8% of GDP, which we will use to reduce debt. Soon we will present to Congress a bill to that effect”, said Chaves.

The president added that the INS “is one of the most solid state-owned companies, and it will also contribute to this fight, with the opening of 49% of its shares so that the country’s pension funds can invest in them”. According to Chaves, from the right-wing Social Democratic Progress Party, the sale of 49% of the INS could give the government 593,000 million colones, equivalent to about US$ 870 million (1.2% of GDP).

Costa Rica and the International Monetary Fund (IMF) agreed, at the beginning of 2021, on financing for US$ 1,778 million disbursable in installments until 2024, before which the Costa Rican Government promised to meet goals such as eliminating the primary deficit in 2023, and lowering the debt to 50% of GDP in 2035, through a series of laws and reforms that do not include the sale of assets.

Costa Rica’s debt is around 70% of GDP

In 2021, the INS, which is in a competitive market with private companies, reported a net profit of around US$ 200 million, while the BCR, one of the 3 public banks in the country, recorded profits of around US$ 80 million.

The ANEP union rejection

Albino Vargas, general secretary of the National Association of Public Employees (ANEP), the country’s main union, said Thursday that what the government should do is attack tax evasion and renegotiate debt instead of promoting the sale of assets. “You can never face the serious problem of debt with the sale of assets. We categorically reject, from any point of view, these ideas that are not new. With this level of public debt and brutal interest payments, the fundamental step is to renegotiate the obscene interest payment and crack down on tax evasion and tax theft”, he warned.

The deputy general secretary of the ANEP, Walter Quesada, announced that the union will be “in the front line of the fight” because they will not accept “the sale of State institutions to pay debt.” “We are not going to accept that public institutions, guarantors of equality in this country, are going to sell it to deliver it to the same companies and rich people as always”, he said.

The Bank of Costa Rica, founded 145 years ago, published a statement in which it asked its workers and clients to “continue to trust the entity” and demanded from the authorities a “deep analysis of the scope of the possible sale, as well as the real impact that the measure would have for the country in its socioeconomic development”. The BCR Employees’ Union also described the idea of ​​selling assets as ‘populist’ and announced that its ‘line of defense’ will be against this and any other proposal that involves the sale of the BCR”.

Additionally, some opposition political parties also expressed their doubts about the sale of assets, since they consider that they would contribute very little to debt reduction.