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(506) 223-1327       Published Thursday, June 22, 2006, in Vol. 6, No. 123        E-mail us    
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'Buddy, can you spare $93 million?'
New administration confronts the sad reality

By the A.M. Costa Rica staff

By now members of the Arias administration have come face to face with the grim realty of the country's finances.

Generating more income is the key to carrying out campaign promises.

The Ministerio de Hacienda, the budget agency, reported this week that the country took in $1.2 billion during the first five months of the year, and it only spent $903 million.

In other words, if the country were a business it would have shown a profit of $73.5 million. But here is the bad news: Costa Rica has enormous external and internal debt, and the payment on those debts was $384 million.

Consequently the government was $93 million short. So it had to borrow more money and create more debt and create more interest to pay next month.

The ministry expressed these numbers in billions of colons, but they are adjusted for the March 15 exchange rate to express them in U.S. dollars here.

These numbers also do not reflect the $2.3 billion debt incurred by the Banco Central for defending the declining colons for years.

So what is a country to do? Libertarios urged the Abel Pacheco administration to make budget cuts. But the country spent $63.8 million more in the first five months of 2006 than it did in 2005. Pacheco was in office until May 8. Income was up $137.3 million due to better tax collection and more activity in the customs branch.

Failing meaningful budget cuts, the Arias administration already has said it will seek additional taxes, although the full extent of the government proposal is not yet public. A value-added system is a certainty because it taxes more types of economic activity.

But then there is the Consensus of Costa Rica, a proposal President Óscar Arias Sánchez and Bruno Stagno Ugarte, the foreign minister, promoted on a recent trip to Europe.

Originally the consensus was to encourage First World lender nations to forgive debt to the most poor and struggling nations so they could invest it into education and other
Costa Rica's financial status*
(first five month of the year)



Income
$ 1,193,486,879
Expenses
$    902,852,883
Debt payments
$    383,699,006


DEFICIT
$     93,065,010
*Ministerio de Hacienda, Banco Central

social programs instead of debt service.

Arias said Tuesday that his promotion of the Consenso de Costa Rica was for him the most important aspect of his European trip. But the concept has changed slightly. Now the beneficiaries of debt relief also would be those nations that spend more in education and health than in arms and soldiers, according to Arias.

Costa Rica, a country without an army, would be in first place under those conditions.

One problem is that internal debt is three and a half times greater than external debt, so the consensus would not cover most of the debt.

Add to these equations that the government is seeking yet more loans for infrastructure. In the legislature are proposals for $127 million from the Japanese government for the valleywide sewer rebuilding, $116 million for the Ministerio de Comercio Exterior to help small and medium enterprises, $30 million from the World Bank for education and even $55 million to help the Ministerio de Hacienda modernize.

Although many of the loans have soft terms, eventually they will have to be paid.

Guillermo Zúñiga, the minister of Hacienda. summarized the situation this way:

"This is the sad reality of public finances: if the rhythm of the growth in the debt is not controlled, whatever effort that is made to improve the collection and to manage in an austere way the public expenditures will be absorbed by the payments of interest.

He said one problem was that salaries increased 15.3 percent over the same period the previous year and the largest increase was of 26 percent in the payment to higher education based on an agreement between the government and public universities.


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A.M.
Costa Rica

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San José, Costa Rica, Thursday, June 22, 2006, Vol. 6, No. 123


Costa Rica Expertise
Costa Rica Expertise Ltd http://crexpertise.com E-mail info@crexpertise.com Tel:506-256-8585 Fax:506-256-7575
 


Click HERE for great hotel discounts


Our readers' opinions
He hopes to retire here
after many, many trips


Dear A.M. Costa Rica:

Last New Year’s Eve, while sitting on the balcony of my hotel in Quepos, I was wondering why I was so taken with Costa Rica. I have traveled extensively and always wanted to go to new places. Even though I enjoyed these trips I always wanted something new.

This was my 13th trip to Costa Rica in five years, and I was puzzled why I don’t want to go anywhere else. After much thought and mulling over the factors such as beautiful scenery, great food, wonderful beaches, and friendly people I came to the conclusion that it was the people who kept me coming back, the other factors can be had elsewhere.  Sure there are robberies here, but by and large the people are the most friendly and warm I have ever met.

Last year I bought ground in Pala Seco and hope one day to have a retirement home here. This year I will return three times bringing my family and friends to enjoy your country.

Art Scena
Huntingdon Valley, Pa.

Real estate article
was a great job


Dear A.M. Costa Rica:

Great job on the front page article by Garland Baker on Monday. So many people get mixed up in frenzied markets of one kind or another and completely forget about very recent history. It is amazing how many people still think that the real estate boom (here and abroad) will go on forever.  It is important to have articles like this on the front page so the people that ignore the writing on the wall can get a dose of reality and hopefully save a few bucks.
 
Dan Chaput
La Guacima de Alejuela

Statistics tell the tale
on incidences of crime


Dear A.M. Costa Rica:

A fellow American recently criticized A.M. Costa Rica for what he considers like an excessive crime reporting practice.  Although anyone is entitled to his own opinion, statements that are not based on statistical data lack credibility.

Crime and insecurity affects the individual as well as the whole community. Crime rate is not a matter of speculation. It’s not based over an individual’s personal appreciation about his experiences and surroundings. It goes far beyond from our premises and/or our neighborhood security. A realistic and professional approach is based on statistics. It’s not what one believes and/or assumes what makes real facts. Real facts feed crime statistics sustained by official reports on criminal incidents.

Considering statistical data, America is a more secure place to live than Costa Rica.  Furthermore, American policing is superior  — technically speaking —  more numerous per capita and less corrupted. Same as the courts. Law is much better enforced in U.S.A.

World Crime Statistics by country:

Costa Rica ranks world's 19th in murders per capita:  0.061006 per 1,000 people.

Costa Rica ranks world's 7th in murders with firearms per capita:  0.0313745 per 1,000 people.

Costa Rica ranks world's 19th in rapes per capita:  0.118277 per 1,000 people.

2004: Costa Rica ranks fifth place in the Americas in murders per capita, after Colombia, Jamaica, Venezuela and Mexico (U.S.A. ranks as America's 7th/World's 24th).

2005: Costa Rica murders increased to 300, almost one per day! (0.071 per 1,000).

Source is HERE!

People in Costa Rica, nationals or foreigners, live caged into their iron-work enclosed dwellings, protected by stout walls and high fences, guard dogs, alarm systems and security locks. No one dares to leave his car unattended by day or nighttime. Supermarkets and shopping centers are protected by bulletproof vested guards armed with shotguns. Upper-class neighborhoods hire full-time guards. Does it sound like U.S.A?

Newspapers do not create or make up criminal incidents, they just report it.

A.M. Costa Rica is neither a leader in that line of reporting nor a contestant. Costa Rica’s national press and TV have the upper hand. A.M. Costa Rica serves well the interest of the local expatriates community, as well as Americans prospecting for relocation to this country.

Instead of serving rose-colored portraits of Costa Rica — a tone with Real Estate and Tourism lobbies — it informs fair and square about the real Costa Rica, the one that is totally absent in promotional magazines stuffed by hired “Self-proclaimed experts on Costa Rica” and controlled by “Special interest Groups.”
Manu Cron
Rohrmoser
Professional Directory
A.M. Costa Rica's professional directory is where business people who wish to reach the English-speaking community may invite responses. If you are interested in being represented here, please contact the editor.

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1807-10/16/06

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You need to see Costa Rican properties for sale
on our real estate page HERE!





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San José, Costa Rica, Thursday, June 22, 2006, Vol. 6, No. 123







Two women surprise robber, and police get a suspect
By the A.M. Costa Rica staff

For the second time in three days a man broke into a home occupied by an elderly lady. This time police caught a suspect.

The action took place about noon in Y Griega en San Francisco de Dos Ríos on the south side of San José.

Two women, 82 and 53, were inside the home when the man made known his presence. Both women suffered injuries to their arms and faces. Police said they were hit by the robber. The older woman was punched in the face and the 53-year-old woman suffered a knife wound to the arm.

Fuerza Pública officers said they found the suspect not far away near a commercial center. He is well known
to police. He is identified by his last names of Flores Corella and is 34 years of age.

The man has been in prison 20 times, mostly for aggravated robbery in which violence was used, police said.

Police said the robber entered the rear of the dwelling by jumping a wall. He picked up various objects of value and only came in contact with the women when he tried to flee.

Police said they recovered the stolen objects when they detained the suspect.

Monday three men tricked their way into a home in Sabana Sur, tied up the 92-year-old resident and took jewels and other items. No suspects were caught.


Students faced with pollution carry their complaint to the local mayor
By the A.M. Costa Rica staff
 
Unhappy students surprised the mayor of Desamparados Wednesday by carrying their complaint to municipal hall. Some 500 students carried signs and blocked the road in front of the Municipalidad de Desamparados.

They were complaining about pollution of their school grounds and of the nearby Rio Cucubres. Students said that when rain comes down, polluted water flows into the school, the Liceo  Monseñor Sanabria.

Jesüs Vasquez Quesada, who is president of the teachers association at the school, said he feared that students might get a serious illness.

Carlos Padilla, the mayor, said there was no money to fix the problem, and he asked for some time to study the issue. He said the work would cost about 65 million colons (about $127,000). He said he would approach emergency commmission members to see if some funds could be located. He said that engineers would study the situation Monday.

A.M. Costa Rica/José Pablo Ramírez Vindas
Students even brought a banner demanding a healthy environment around the school.


Vannessa says it has borrowed $1.5 million to complete gold mine plan
By the A.M. Costa Rica staff

Vannessa Ventures Ltd. said Wednesday that a feasibility study on its gold mine should be finished later this month or next.

Crucitas open pit gold mine near the Nicaraguan border is being developed by Vannessa's wholly owned subsidiary, Industrias Infinito S.A. 

The company outlined its timetable as it announced that it had borrowed $1.5 million to pay for completing the study and for mine machinery.

The controversial mine has generated an extensive amount of paperwork.

The company said that all infrastructure has been defined and the cost estimated, but a more favorable agreement with the local authorities to improve the access road requires that new estimates be prepared.

Environmental protection and monitoring programs have been designed and estimated, together with a closure plan, and these are in the process of a
final review, the company said.

The loan was from Exploram Enterprises Ltd. and is payable on demand after Aug. 31. The agreement is secured by the assets of the company. The money also will go to buy grinding equipment.

The feasibility study is being carried out by Micon International Ltd., the company said.

The company said that an agreement with the local electrical utility has been negotiated to supply power.

Because the company uses mercury to leach gold from crushed rock, the project has raised the concern of local environmentalists who fear the chemical will seep into the nearby Río San Juan. However others see the project as a way to bring jobs to the northern zone.






You need to see Costa Rican tourism information HERE!



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San José, Costa Rica, Thursday, June 22, 2006, Vol. 6, No. 123




Gangs and demagogues threaten fragile democracy
Special to A.M. Costa Rica

In recent decades, nearly all nations in Latin America and the Caribbean have made significant progress in the democratization of their political systems, said two senior U.S. officials.

Testifying Wednesday before the U.S. House of Representatives' International Relations Committee, the two officials agreed that the Western Hemisphere has undergone a remarkable transformation within a relatively brief period, evolving from an unstable region prone to military coups into a vibrant, if still fragile, community of democracies. They said the only hemispheric country that has not yet embraced democracy is Cuba, which is still ruled by dictator Fidel Castro.

Paula Dobriansky, undersecretary of State for democracy and global affairs, in her prepared remarks, told legislators that the United States carefully nurtures the democratic consensus in the Americas and seeks "to work with responsible leaders from across the political spectrum in a respectful and mutually beneficial way to make democracy a force for inclusion and empowerment."

Yet "while the region has come far,” it continues to face many challenges, added Ms. Dobriansky. Popular expectations have produced pressure on governments to be more responsive to the needs of ordinary citizens, but many regional institutions are not yet capable of delivering the changes that citizens expect, she said. "Where the gap is largest, populations are most susceptible to the siren songs of populists and the backward momentum they represent," she said.

Since political movements sparked by populist demagogues often threaten to undermine representative democracy, "this task of strengthening institutions has become a key priority of governments throughout the region," she explained. "Supporting our neighbors in this quest is among the highest priorities of our policy in the Western Hemisphere."

Ms. Dobriansky said U.S. assistance programs in the hemisphere "range from legal-code reform and judicial training to anti-corruption projects, conflict resolution, and support for free and fair elections." She pointed to established programs now operating in several countries.

"In Paraguay and the Dominican Republic, we've worked with our partners to improve the legal environment for anti-corruption reform and the
administration of justice," she said. "In Haiti, perhaps our biggest challenge, we helped to bring about
successful presidential and parliamentary elections by strengthening political parties, reinforcing the Electoral Council, supporting election observers, training journalists, and supporting civic education campaigns."

Similarly, said Ms. Dobriansky, "promoting economic prosperity is fundamental to our agenda because the inequality of income and wealth and social exclusion that characterize much of the region make it difficult for democracy to thrive.” At the same time "sustainable economic growth and political stability are only possible if governments consciously provide access to the political system, economic opportunity, and social justice to all citizens, especially the poor and marginalized."

Adolfo Franco, assistant administrator for the Latin America and Caribbean bureau of the U.S. Agency for International Development, pledged that "the strong economic, cultural, and geographic ties" between the United States and its hemispheric neighbors will ensure that his agency "remains committed to promoting strong and prosperous democracies in Latin America."

Lately, the aid agency has become increasingly involved in addressing the issue of gangs and crime in Central America and Mexico, Franco told lawmakers. "When Central Americans are polled about their primary fears, personal security and neighborhood safety are the most common concerns, and gangs are often cited as the reason for high rates of crime and violence in their communities," he said. 

Gang activity also poses a serious threat to democracy, since "in many countries, a high level of crime provides the strongest justification in people's minds for a military coup," he added.

A recent report "shows that effectively halting the spread of gang violence in the long term will require a combination of prevention, intervention, and law enforcement approaches," he said.  Franco observed that most countries have responded by increasing their investment in law enforcement, but have not made concerted attempts at prevention and intervention.

However, his agency "is uniquely positioned to address prevention and intervention aspects, and is currently looking to do so by supporting policies and community-based programs that address the root causes of youth gang proliferation in El Salvador, Guatemala and Honduras," he said.

Latin America's challenges require a long-term, sustained, and collaborative effort on behalf of U.S. government agencies and host-country governments, Franco said.


While more aid sought to get farmers off coca plants
Special to A.M. Costa Rica

More international aid is needed to help three nations in the Andean region, Bolivia, Colombia, and Peru, continue their recent successes in eradicating coca, the main ingredient used to make cocaine, says a drug agency of the United Nations.

The U.N. Office on Drugs and Crime appealed Wednesday for the aid to help poor farmers in the Andean countries make a livelihood growing legal crops instead of coca.  The office said such alternative development, besides contributing to the prevention and reduction of coca cultivation, also helps the overall development of local communities in the Andean region.

Antonio Costa, executive director of the U.N. drug agency, said the three Andean governments are "trying to hold the line on the significant reductions" in producing coca that have been made in the past five years, with overall figures of coca production remaining nearly a third below their peak of 2000.

The aid, said Costa, is needed to "provide poor coca farmers with sustainable alternative livelihoods."
Costa's comments came at a news conference in Bogota, where he presented his agency's 2005 Andean Coca Survey.  Costa's drug office said the survey showed that coca cultivation in the Andean region rose 1 percent from 2004 to 159,600 hectares in 2005.  This increase reflected an 8 percent increase in coca cultivation in Colombia, while cultivation in Bolivia and Peru fell by 8 percent and 4 percent, the survey said. Global cocaine production fell 3 percent to 910 metric tons in 2005. (See related article.)

Assistance already being provided to wean farmers from coca is proving effective, said Costa, but added that the amount of aid is much too small.

"Our aid efforts need to be multiplied at least tenfold in order to reach all impoverished farmers who need support," Costa said.  He added that reducing coca production is a "major undertaking, but it could reduce poverty and the world supply of cocaine at the same time."

The U.N. agency said Colombia remained the world's largest coca grower in 2005, accounting for 54 per cent of total cultivation.  Peru was second with 30 per cent and Bolivia third with 16 percent.






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