Barclays financial services company is recommending investors to keep their investments in Costa Rica “low”.
According to Barclays,
Aguilar’s departure could add uncertainty to the fiscal consolidation route. While (Aguilar) was in office, the government carried out the much-needed tax reform (…) In addition, she managed to present a fiscal budget for 2020 that complied with fiscal laws to limit the growth of current spending in the middle of a strong slowdown in the economy. But Aguilar’s strong position in complying with fiscal adjustments put her at odds with several unions and municipalities, which were reluctant to lose their benefits. In addition, last week, students and presidents from different universities protested against changes in their autonomy to decide their budgets.”
Barclays points out the challenge that President Carlos Alvarado has to comply with the law and fiscal reform, particularly due to union pressures and low economic growth.
According to the London-based financial services company, Aguilar’s resignation could suggest that union pressure also weighed on her decision (…) due to their resistance to austerity measures and spending control.
In that sense, President Alvarado may choose a replacement with a more “consensual” view of the speed of fiscal consolidation, but in the end, we believe that any replacement will still have to deal with fiscal restrictions. On the other hand, the approval of the future issuance of external debt could be more difficult.”