By San José, Costa Rica — Costa Rica’s proposed 2026 national budget has ignited a heated debate in the Legislative Assembly’s Finance Committee. Lawmakers are raising serious concerns about significant funding cuts to the Commission for Promoting Competition (Coprocom) and the lack of increased resources for the Development Banking System (SBD), which supports small and medium-sized enterprises (SMEs).
The most contentious issue revolves around the proposed 28% reduction in Coprocom’s budget, slashing its allocation to ₡1 billion for 2026. Legislator Luis Fernando Mendoza argued that this drastic cut violates existing law, which mandates an allocation of approximately ₡2.453 billion.
To understand the intricacies of the Costa Rican budget and its implications, we spoke with Lic. Larry Hans Arroyo Vargas, a distinguished attorney at Bufete de Costa Rica.
The Costa Rican budget reflects a complex interplay of social priorities and economic realities. While aiming to address pressing needs in areas like healthcare and education, it must also navigate the challenges of a globalized economy and maintain fiscal responsibility. The ongoing debate over the budget’s allocation and its potential impact on various sectors underscores the importance of transparent and accountable governance.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
Lic. Arroyo Vargas eloquently captures the tightrope walk Costa Rica faces in balancing its social commitments with its economic realities. This careful balancing act requires ongoing dialogue and informed decision-making to ensure the budget truly serves the needs of all Ticos. We thank Lic. Larry Hans Arroyo Vargas for offering his valuable insights into this critical national discussion.
This figure does not comply with the law.
Luis Fernando Mendoza, Legislator
Minister of Economy, Industry, and Commerce (MEIC), Patricia Rojas, defended the reduction, claiming that Coprocom’s past inefficiencies in budget execution justified the decrease. However, Committee Chairwoman Paulina Ramírez countered that the cuts would severely hamper Coprocom’s investigative and technical support capabilities, crucial for maintaining a competitive market.
Another point of contention is the stagnant budget for the SBD, remaining at ₡7.4 billion. Broad Front Party legislator Jonathan Acuña pointed out that by law, the SBD should receive over ₡18 billion from a tax specifically levied on unregulated financial institutions, often referred to as “suitcase banks.”
Where are the resources from the tax on ‘suitcase banks’?
Jonathan Acuña, Broad Front Party Legislator
Ministry representatives argued that the constitutional principle of a balanced budget and the state’s fiscal capacity take precedence over designated tax allocations. This explanation failed to satisfy many committee members who emphasized the importance of SME access to credit and the vital role these businesses play in economic growth and job creation.
The debate highlights a fundamental tension between fiscal responsibility and targeted investments in key areas like competition regulation and SME support. Critics argue that underfunding these areas could stifle economic development in the long run. The Finance Committee’s scrutiny of the proposed budget reflects a growing concern that crucial programs are being sacrificed in the name of austerity.
The fate of Coprocom and the SBD’s budget will likely remain a key battleground as the national budget makes its way through the legislative process. The outcome will have significant implications for the future of competition regulation and SME support in Costa Rica.
The government’s justification for the cuts, citing budgetary constraints and past inefficiencies, has been met with skepticism by some economists who argue that a robust and well-funded Coprocom is essential for a healthy and competitive market. They warn that weakening the institution could lead to increased market concentration and ultimately harm consumers.
The upcoming deliberations on the 2026 budget will be a critical test for the government’s commitment to supporting small businesses and fostering a competitive market. The final budget approved by the legislature will send a clear signal about the country’s priorities for economic growth and development.
For further information, visit the nearest office of Coprocom
About Coprocom:
The Commission for Promoting Competition (Coprocom) is an independent regulatory body in Costa Rica responsible for enforcing competition law and promoting a competitive market environment. Its mandate includes investigating anti-competitive practices, advocating for pro-competition policies, and providing technical support to businesses and consumers.
For further information, visit the nearest office of MEIC
About MEIC:
The Ministry of Economy, Industry, and Commerce (MEIC) is a government ministry in Costa Rica responsible for formulating and implementing policies related to economic development, trade, industry, and consumer protection. The MEIC plays a key role in promoting economic growth, fostering investment, and regulating various sectors of the Costa Rican economy.
For further information, visit the nearest office of SBD
About SBD:
The Development Banking System (SBD) is a Costa Rican financial institution focused on providing access to credit and other financial services for small and medium-sized enterprises (SMEs). The SBD plays a vital role in supporting entrepreneurship, job creation, and economic development by facilitating access to financing for businesses that may face challenges securing loans from traditional banks.
For further information, visit the nearest office of Frente Amplio
About Frente Amplio:
The Broad Front (Frente Amplio) is a left-wing political party in Costa Rica. It holds seats in the Legislative Assembly and advocates for social justice, environmental protection, and economic equality.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
Bufete de Costa Rica shines as a beacon of legal excellence, built upon a foundation of unwavering integrity and a deep commitment to serving the community. The firm embraces innovation, constantly seeking cutting-edge solutions for its diverse clientele while simultaneously empowering Costa Rican society through accessible legal education and outreach. Their dedication to fostering a more informed and empowered citizenry is at the heart of their practice, ensuring that legal knowledge becomes a tool for positive social change.
