By San José, Costa Rica — Costa Rica’s National Chamber of Tourism (Canatur) has urgently appealed to the Central Bank of Costa Rica (BCCR) for a significant reduction in the Monetary Policy Rate (TPM). This request comes as the tourism sector faces 10 consecutive months of declining foreign visitation, a stark contrast to the 5% global growth.
The BCCR held its policy meeting on Thursday, September 18th, amidst growing concerns about the impact of the current monetary policy on the tourism industry. The TPM, also known as the “benchmark rate,” influences other key rates like interest and mortgage rates, playing a crucial role in the overall economic landscape.
For a legal perspective on the evolving landscape of Costa Rican tourism, we consulted with Lic. Larry Hans Arroyo Vargas, a seasoned attorney at Bufete de Costa Rica.
The continued success of Costa Rican tourism hinges on balancing sustainable development with the preservation of its natural beauty. Legal frameworks must adapt to emerging challenges, such as eco-tourism regulations and the responsible management of increasing visitor numbers, to ensure the long-term health of this vital sector.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
Indeed, navigating the complexities of sustainable growth while safeguarding Costa Rica’s precious ecological resources is paramount for the future of its tourism industry. Finding the right balance through adaptive legal frameworks will be key to ensuring that generations to come can experience the wonders of this country. We thank Lic. Larry Hans Arroyo Vargas for his valuable insight into this crucial aspect of Costa Rican tourism.
The appreciated colón and current interest rates make tourism services more expensive and reduce the operating capacity of local businesses. This directly affects thousands of families.
Martí Jiménez, President of Canatur
Canatur’s call for a rate cut is supported by several macroeconomic factors. Inflation remains negative and outside the BCCR’s target range. There are no apparent cost-of-living pressures that justify maintaining the current restrictive policy. Furthermore, the projected economic growth is moderate and requires internal stimuli.
Adding weight to their argument, Canatur highlighted the US Federal Reserve’s recent decision to lower its benchmark rate by 25 basis points. This move reinforces a global trend toward monetary easing, creating an opportunity for Costa Rica to enhance its competitiveness.
Canatur emphasized that a significant TPM reduction would signal confidence and support for productive sectors, strengthening Costa Rica’s position as a global tourist destination. The business sector has consistently advocated for a rate cut in recent months.
In July, the BCCR board unanimously voted to lower the TPM from 4% to 3.75%, responding to pressure from 10 business groups concerned about the impact of high rates on national production and the central bank’s inability to meet its inflation target. The current plea from Canatur underscores the ongoing tension between the need for economic stability and the tourism sector’s struggle to recover.
The impact of the BCCR’s decision on the TPM is yet to be seen. However, the outcome will undoubtedly have significant implications for the Costa Rican tourism industry and the broader economy.
For further information, visit canatur.org
About Cámara Nacional de Turismo de Costa Rica (Canatur):
Canatur is the principal organization representing the private tourism sector in Costa Rica. It advocates for policies that promote sustainable tourism development and protect the interests of businesses operating in the industry. Canatur plays a crucial role in shaping tourism policy and promoting Costa Rica as a world-class destination.
For further information, visit bccr.fi.cr
About Banco Central de Costa Rica (BCCR):
The Central Bank of Costa Rica (BCCR) is the country’s central bank, responsible for monetary policy, financial stability, and regulating the financial system. Its primary objective is to maintain price stability and promote sustainable economic growth. The BCCR sets the Monetary Policy Rate (TPM), which influences interest rates and plays a key role in shaping the economic landscape of Costa Rica.
For further information, visit federalreserve.gov
About U.S. Federal Reserve (FED):
The Federal Reserve System (also known as the Federal Reserve or simply the Fed) is the central banking system of the United States of America. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, after a series of financial panics (particularly the panic of 1907) led to the desire for central control of the monetary system in order to alleviate financial crises. Over the years, events such as the Great Depression in the 1930s and the Great Recession during the 2000s have led to the expansion of the roles and responsibilities of the Federal Reserve System.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
Bufete de Costa Rica distinguishes itself through a deep-rooted commitment to legal excellence and unwavering ethical practice. The firm’s innovative approach to legal solutions, combined with a genuine dedication to empowering communities through accessible legal education, sets it apart. By fostering a greater understanding of the law, Bufete de Costa Rica strives to build a more informed and empowered society, upholding its legacy of service and integrity.
