The measure announced by the Ministry of Finance and the Central Bank to attract resources through the so-called Treasury Bills is something extreme and risky and therefore a tool that should not be used more than once, according to experts.
Economist Leiner Vargas said that the decision adopted by the administration of Carlos Alvarado is a “financial last resort” that should not be used other than in cases of catastrophes and when there are no more economic options.
If the economy had a strong inflationary pressure that [measure] would translate into more inflation, but I imagine that, in this case, the Central Bank is playing with a small margin to avoid putting too much pressure on inflation,”
said Vargas.
In total, the Central will be “lending” 498 billion colones to the Treasury.
In economics, placing more liquidity on the street without adequate content; that is, without being generated through wealth and done through a volatile mechanism like this, implies a greater risk of an increase in the prices of the products consumed by citizens.
It is more serious than people imagine. If the State fails to settle its accounts, the economic system has to do it. In Economy, as we say in class, there is no free lunch… This loan is not for free,”
added Vargas.
Economist Daniel Suchar agreed that the measure is extreme, although he pointed out that as long as the inflation target is maintained, there will be no problem.
There will be money issuance and liquidity in the market and that will make the macro-price of inflation and even the exchange rate a little bit higher. But it’s clear that this is a very short term. We hope that it does not have a considerable impact and that it is something light,”
said Suchar.
The expert believes it’s not normal for these types of measures to be taken, and that success will depend to a large extent on the approval of the fiscal plan.
The measure was taken only a day after legislators from different factions announced their fear that the government would not have enough resources to meet their closest obligations, such as bonuses.