Tico Tourism Sector Finds Problems in Proposal for a “Guarantee Fund”

    There is much room for improvement in the plan, they state

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    The urgent need that the national tourism industry has expressed, for the approval of the “bill for the creation of a Guarantee Fund”, did not prevent the main union from pointing out several problems with the proposal that the Government presented on February 4.

    A deficient coverage, the colonization of the loan and the possible politicization of financial aid were some of the observations made by the president of the National Chamber of Tourism, Rubén Acón, on file 22,144, “Law of Creation of National Fund of Guarantees to Support Companies Affected by COVID-19 and the Economic Reactivation”, that is currently is in the Tax Affairs Commission.

    Although the initiative was announced shortly after the Pandemic began in our country, it was not until ten days ago that its draft was made public. Despite the time that has elapsed, the Executive has not been able to solve some deficiencies, Acón explained.

    Key Observations

    According to the text presented by the Government, the coverage offered is established based on a loss projection of 10%. However, the guarantee fund would only cover 70% of that total. That means that the bank would have to assume the remaining 30%.

    “That’s where the problem started. They are going to examine it with a magnifying glass, because they are assuming a risk of 30%. Banks have said that if the risk is 20% they would be calmer. Not even 100% is covered by the fund and that is a novelty. “The guarantee funds in the world, if the estimated loss is 10%, 10% is covered,” Acón said. Second, the spokesperson affirmed that the proposal does not establish an order of priority, so tourism companies could be left out of aid.

    Colon depreciation

    The third point pointed out by the Canatur official is the change of credit currency. On September 16, the Government signed a credit agreement for $ 300 million with the Central American Bank for Economic Integration (CABEI). However, the proposal is that this money be transferred to colones so that ¢ 180,000 million of funds enter the single state fund, eliminating the trust that would take care of the resources.

    “Why are we going to convert a loan of $ 300 million to colones, if the hard currency is the dollar? Why are we going to pass it on to the Treasury and not to the banks? There the multiplier effect is lost. They are things that one does not understand”, asked Acón.

    Government monopoly

    Finally, the Canatur representative explained that the business sector is concerned about the Executive’s intention to monopolize the appointments to the Governing Council, which would be in charge of supervising the fund.

    “The project establishes that it will be managed with a Governing Council. There are three ministers and two from the private sector. But it turns out that the two from the private sector are appointed by the government. We insist these are from Uccaep. Because if not, it could be handled with political criteria”, argued the spokesperson.

    Shared criticism

    The observations made by Acón are in line with the criticisms made by the economist, Gerardo Corrales, one of the main promoters of the idea. In an interview the expert advanced the same observations and added three more:

    – Technical review: although the technical recommendation is for banks to present their expected losses and review them via Sugef, the government’s plan would leave the calculations to the Governing Council.

    – It substitutes but does not accompany: the text would not allow the fund to act as an additional guarantee but would instead substitute others already committed, such as mortgages.
    – Multiplying effect: if the deposit were made in state banks, this would allow generating interest to finance working capital loans, losing the possibility of multiplying the fund up to 1.8 times.

    Official response

    For its part, the Government ensures that its guarantee fund plan would cover 20% of the business park and a diversity of sectors. “It is aimed at companies affected by the Pandemic, regardless of size, especially tourism, restaurants, bars, transportation and commerce,” said the Presidential Office.

    This past Monday, the deputy for the Christian Social Unity party (PUSC and a member of the Tax Affairs commission, María Inés Solís, reported that the latest text had already been sent for consultation with the different institutions of interest. This, in order to have the technical support to analyze the project and make the necessary changes, explained the congresswoman on her official Twitter account.

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