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| A.M. Costa Rica Second newspage |
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| San José, Costa Rica, Tuesday, July 24, 2007, Vol. 7, No. 145 | |||||||||
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by Compañía Lírica Nacional By the A.M. Costa Rica staff
The Compañía Lírica Nacional is staging Guiseppe Verdi's "Falstaff" at the Teatro Nacional starting Friday night. The comic opera is Verdi's last. He wrote it when he was in his eighth decade. The opera first was staged in 1893. The opera is being presented in Central America for the first time. The opera is based on the Shakespearean character Sir John Falstaff, who is a rogue, liar and cheat. The opera itself is based on the Shakespearean drama "The Merry Wives of Windsor," although Falstaff appears in several other works of the bard. The staging here has 10 Costa Ricans in the 12 major roles. The curtain goes up at 7 p.m. Subsequent performances are Sunday at 5 p.m. and Aug. 1 and 3 at 7 p.m. and Aug. 5 at 5 p.m. There are performances Aug. 8 and 9, too. Except for Sundays, curtain is at 7 p.m. In addition to the national opera company, the Orquesta Sinfónica Nacional will provide the music as will 40 members of the Coro Sinfónico Nacional. The opera is a love story, but it also is dominated by the anti-hero Falstaff. Kim Josephson is in the Falstaff role. José Luis Sola is Fenton, a young man in love. María Marta López is Nanetta, the object of Fenton's affections. Health minister threatens to cancel Limón carnival By the A.M. Costa Rica staff
Dengue is epidemic in the Provincia de Limón, and the health minister said she would suspend the October carnival if the situation did not improve. Part of the problem is hostility to health workers who are spraying for mosquitoes in Limón centro. They have had run ins with residents. The minister, María Luisa Ávila, already has canceled a festival planned for next week in Limón. The province has more than 3,100 persons ill with the mosquito-born disease and 40 of those are ill with the dangerous hemorrhagic form. Throughout the country more than 8,000 persons are ill. The other trouble spot is the Pacific coast. Dr. Ávila is calling upon the residents to cooperate with the fight against dengue. She said she wants a 20 percent drop in the rate of illness or she will cancel the carnival. She has that power as the nation's senior health official. The carnival is a tourist attraction and a major money maker. Belén named best town in financial resources use By the A.M. Costa Rica staff
The Contraloría de la República, the nation's financial watchdog, has named Belén the most effective municipality in 2006. Golfito came in last, said the agency. The rankings reflect the Contraloría opinion of how the municipalities have managed their financial resources. Santa Ana was second. Colorado, which received a major infusion of cash from a back debt in 2006, was third and Garabito was fourth. The others in that order were San José, Escazú, San Isidro, Santa Cruz, Cóbano and Montes de Oca. The second worse was Dota. Peñas Blancas was third from the end and Coto Brus was fourth from the end. Also in the worst category were Alajuelita, Guácimo, Puriscal, Siquirres and Buenos Aires de Puntarenas. Some of the low-ranking communities had deficits, the Contraloría said.  Ministerio de Gobernación,
Policía
y Seguridad Pública photo Part of the record haul of ecstasy
Air passenger detained
with big bag of ecstasy By the A.M. Costa Rica staff
A 31-year-old Israeli tried to bring more than 18,000 doses of the drug ecstasy into the country Saturday, law enforcement officials said Monday. He was identified by the last name of Koren. He came to Juan Santamaría airport from Spain, said Fernando Berrocal, minister of security. The drug weighed nearly four kilos, nearly 8.5 pounds, said the Policía de Control de Drogas. Berrocal said it was clear that the drug was for consumption in Costa Rica and not for shipment to other countries. Costa Rica is a major transit point for drugs, mostly from Colombia. He said that was the largest quantity of that type of drug ever encountered in Costa Rica. Meanwhile, in Coto Brus near the border with Panamá, drug agents found 959 kilos (1,110 pounds) of cocaine hidden in the cab of a truck. Arrested was a 35-year-old man, the driver, with the last name of Jiménez. Also detained was the truck owner who was driving nearby on a motorcycle. His last name is Montero, agents said. Former teacher held in U.S. to face rape charge here By the A.M. Costa Rica staff
U.S. marshals have detained a Costa Rican teacher wanted for aggravated rape and coercion. The charges stem from the time he was working at Escuela de El Cajón in Grecia and three times forced himself on a sixth-grade student in exchange for improving her grades and eliminating records of her absences, said law enforcement officials here. The man was identified as Luis Gustavo Alfaro Soto, 32. He was reported to be in the United States illegally. He was located in the State of New Jersey, officials said. Alfaro is a native of Sarchí. U.S. immigration agents participated in the arrest, and officials said the man would be deported to Costa Rica.
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| San José, Costa Rica, Tuesday, July 24, 2007, Vol. 7, No. 145 | |||||||||
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| Investing
locally means facing some unique challenges |
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By Dan Chaput*
Special to A.M. Costa Rica Not many people in Costa Rica understand the local financial markets. Ticos as well have a very low rate of financial investing with only 1 of every 20 being an investor as compared to 1 of 2 in the United States. I get questions all the time asking if there are good opportunities in Costa Rican markets. I was hired by the Costa Rican stock exchange (La Bolsa Nacional de Valores) a few years ago right after a market crash to help with some projects to provide more liquidity in order for the local markets to try to avoid crashes of the same type in the future. I'll try to explain the good, bad and ugly of it all to help readers decide if this is something worthy of hard earned dollars. Let's start with the risk rating of the country as a whole. Every country in the world has a “debt rating” which measures how at risk the country is of not paying its debt. Standard & Poors ratings range from AAA (like the United States and European Union) to D (for “in default”). Costa Rica is right in the middle with a BB which falls under the category “below investment grade” or “junk debt.” This means that the best rating any stock or bond could have in the country is “junk.” It is not possible for a Costa Rica-based investment to have a rating higher than that of the country as a whole. The Costa Rican market is basically made up of a few components (percentages are approximations): -bonds 15 percent, -recompras (repurchase agreements) 75 percent, -real estate funds 4 percent, and -stocks 1 percent. I know what you are thinking. If 75 percent of the market are those “recompras,” maybe I want those? Hold your horses. Bonds — All bonds are either issued by a government agency (the treasury or the central bank) or are private. Very few bonds are liquid with the exception of a few dollar-denominated government bonds which trade internationally. Recompras — These are leveraged short-term debt obligations with something backing them, either a bond, a mortgage or real estate. They tend to be short-term between 30 and 90 days. These have much more volume because |
many Ticos like short-term
instruments to keep
risk down. Because of the short-term nature, brokers can get much more
volume and commissions, so this is what they tend to sell the most. Real estate funds — These are like real estate investment trusts in the United States or Europe. These are mutual funds that hold office buildings or sometimes residential projects to where the investor is an owner of the holdings inside the fund. These can be relatively safe or risky. Be sure to read the prospectus to evaluate the projects inside. Stocks — This market was virtually non-existent in Costa Rica just a few years ago. At this time there are only 5 publicly traded companies in Costa Rica, the most liquid of which is FIFCO, the beverage company that makes Imperial and the Tropical drinks. Other companies include Atlas Electric and Durman Esquivel. The local stock indexes have done quite well over the past year with almost a 100 percent return. You may be thinking “OK, it isn’t perfect, but higher risk means higher reward!” Not always. As a guy that likes to speculate now and then, I can tell you that a vital component of a good market is liquidity. There are few instruments here with good liquidity, so caveat emptor! Right now there are few products which offer good return for the risk level. On top of that, commissions can be quite high, and sometimes the broker will try to ask for a cut of your winnings when you sell. For example if you made a 10 percent return (which is way above average for Costa Rica) your broker may say “Hey, nice return. How about 8 percent for you and 2 percent for me”. I have never heard of such a thing elsewhere! If your broker tries this, find another one. More and more local investors are looking to international markets outside of Costa Rica to avoid the problems locally, but all is not lost with Costa Rican markets. I know that the exchange and the regulators are working hard on new ideas and new projects to improve regulation, liquidity, and diversity. One of the latest developments from the exchange is a project called “M.O.R.E” which intends to give small- to medium-sized companies an efficient platform on which to go public. That's not a bad idea. What do I do for my clients? For the time being, I recommend safe, well regulated markets in the United States or Europe with liquidity and diversity. Costa Rica is OK, but if you take the plunge, don’t make it a large part of your portfolio unless there is a really good reason for it. *Dan Chaput is a three-year resident of Costa Rica and an independent consultant for local brokerage firms and individuals. He can be reached HERE. |
| Tons
of dollars coming here could bust budgets of expats |
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By Dennis Rogers
Special to A.M. Costa Rica Expats with a fixed dollar income had better hope the Banco Central de Costa Rica can hold its ground against the steady stream of dollars entering the country. With considerable effort, the bank has kept exchange rates steady. But inflation continues. The system in place since October 2006 did away with programmed devaluations and took up a policy where the bank sets exchange rate targets within a “band” of acceptable upper and lower limits. These targets were also supposed to devalue slowly. The colon has stubbornly refused to devalue, and the bank has had to intervene and buy dollars to stop it from appreciating above the established limit. A serious appreciation of the colon would be a disaster for tourism and many export businesses. The central bank in effect prints money to buy the dollars. This means more local currency in the economy with no increase in available goods and services, with inflation the result. Inflation for calendar year 2006 was 9.4 percent, which the central bank trumpets as the best since 1993. The new policy was only in place for the last two and a half months and was presumably a marginal contributor to the change. So far interventions have been regular, with more than $779 million purchased on the local market from October 2006 through February 2007. Inflation continues although at a lower rate than the same months in 2006. A regular poll of outside experts taken by the central bank’s research department shows an expectation for the next 12 months of about 9 percent inflation. These experts think there will eventually be some devaluation over that time span, perhaps 2.5 percent. If this is true, anyone with a dollar income will find their buying power in the local economy eroded by about 6 to 7 percent, without taking into consideration inflation in dollar prices worldwide. |
 Another way of looking at the relative value of the colon is the Big Mac index produced by the Economist magazine. This purports to measure Purchasing Power Parity (PPP) “The Big Mac PPP is the exchange rate that would mean hamburgers cost the same in America as abroad. Comparing actual exchange rates with PPPs indicates whether a currency is under- or overvalued,” relative to the dollar, explained the authors of the survey. True calculations of PPP require a broader basket of goods and services, but the Big Mac is easier to compare than a plate of Costa Rican rice and beans, Mexican beans and tortillas, or Uruguayan milaneza. Proponents of the hamburger theory claim it does predict long-term exchange-rate movements. In theory, exchange rates should converge to reflect their actual buying power, but components such as local rents and labor cannot easily be traded across borders the way beef and onions can. So in reality the index is only of use in comparing economies at similar levels of development, with similar wage scales. According to the cost of the burger when the survey was taken (higher now), the Big Mac PPP has the colon undervalued by 36 percent. Because of the lower cost of labor, poor countries’ currencies usually show up as undervalued. Among countries in Latin America with a similar state of development, Argentina is -22 percent, Chile -13 percent, Mexico -21 percent, and Uruguay -24 percent. The Costa Rican colon thus appears excessively undervalued. Without the bank’s intervention it should gain and be less undervalued. With the above countries as a guide, in a free market about 435 colones to the dollar would mean equilibrium. The exchange rate now is 520.75 to one U.S. dollar. |
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A.M. Costa Rica rates Display and classified rates have increased as of June 18, 2007. The average display increase is between 6 and 8.5 percent. This is the first rate increase in the six-year history of the newspaper. The new rates are posted here: As usual, the bulk of any income goes to get you a better newspaper. |
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| San José, Costa Rica, Tuesday, July 24, 2007, Vol. 7, No. 145 | |||||||||
| Noriega's legal team makes bid for his return to Panamá |
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By the A.M. Costa Rica wire services
Lawyers for former Panamanian dictator Manuel Noriega have asked a U.S. judge to block his possible extradition to France to face money-laundering charges. Noreiga is seeking to return to Panamá when he is paroled from a U.S. prison in September. The legal troubles of Panama's former military leader are likely to continue when he is released from a U.S. prison Sept. 9, after serving 17 years of a drug sentence. The governments in both France and Panamá are seeking the custody of Noriega to answer for crimes he allegedly committed while he was in power. Noriega was convicted in 1992 in the United States for protecting Colombian drug cartels shipping drugs to the United States, and sentenced to 30 years in prison. He was convicted in France in 1999 for laundering millions of dollars in alleged drug money. He faces a 10-year jail term there. In Panama, Noriega is accused of taking part in the killings of at least two political opponents. Noriega's attorneys filed motions in a Miami court Monday asking that he be returned to Panamá to fight the charges against him. Attorney John May says U.S. courts for years have classified Noriega as a prisoner of war under the Geneva Conventions, because he surrendered during a U.S. military invasion launched in 1989. "The French request would contravene the terms of the Geneva Conventions which require that General Noriega be repatriated to Panamá," he said. |
U.S. attorneys representing the French government filed the extradition request in Miami. Last week, a U.S. State Department
spokesman said the decision will belong to a Miami judge whether to
order Noriega's extradition to France or to Panamá. The judge is
expected to hold an initial hearing Thursday. Guy Lewis, a former U.S. attorney who helped prosecute Noriega, says he feels the French request will prevail because it has satisfied U.S. legal requirements. "He was tried [in France], he was convicted, and now it is time to pay the piper. I think he will have to go to France, serve his sentence, and eventually I think he will make his way back to Panamá," he said. Noriega's attorneys say they believe that officials want to send the former leader to France in an effort to spare Panama's President Martin Torrijos from any political embarrassment. Panama's government says it has filed several extradition requests in Washington, and says it wants to hold Noriega responsible for alleged crimes during his years in power. Former prosecutor Lewis says officials at the time of Noriega's 1992 conviction made no provisions for possible future cases against him. He added he is not surprised by the current battle over custody. "This of course was the first time that a foreign leader had been indicted, arrested, brought to the United States, prosecuted and convicted." For better or worse, this is the kind of case that seems to make legal precedent on a regular basis, he said. Lewis says the Noriega case has been a key test of the U.S. justice system over the years, and he says he expects it will continue to do so in coming weeks. |
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| San José, Costa Rica, Tuesday, July 24, 2007, Vol. 7, No. 145 | ||||||
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