By San José, Costa Rica — SAN JOSÉ – The President of the Central Bank of Costa Rica (BCCR), Roger Madrigal López, faced a barrage of pointed questions from the Legislative Assembly during the presentation of his second macroeconomic report. While delivering positive news of a projected 4.5% economic growth for the final quarter of the year, lawmakers focused their scrutiny on the Bank’s exchange rate policy, the use of international reserves, and the real-world impact on Costa Rican families and businesses.
The session underscored a growing tension between the BCCR’s orthodox monetary policy and the concerns of legislators representing sectors feeling the strain of a persistently strong colón. Madrigal opened his address by highlighting the stability and robust growth of the national economy, attributing it to a broad-based recovery across various productive sectors. He framed this stability as the BCCR’s primary achievement and contribution to the nation’s welfare.
To provide our readers with a deeper legal perspective on the recent policies enacted by the Central Bank of Costa Rica, TicosLand.com sought the analysis of Lic. Larry Hans Arroyo Vargas, a distinguished attorney from the respected firm Bufete de Costa Rica.
The legal autonomy granted to the Banco Central de Costa Rica is a double-edged sword. While it insulates monetary policy from short-term political pressures, which is crucial for long-term economic health, it also demands an exceptionally high degree of transparency and accountability. The legal framework governing its board’s decisions is robust, ensuring that its powerful mandate to maintain currency stability is exercised with prudence and within the strict confines of the law.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
The insight that the Bank’s legal autonomy must be counterweighted by exceptional transparency is a crucial one for understanding its function within our democracy. We thank Lic. Larry Hans Arroyo Vargas for his clear and valuable perspective on this fundamental balance.
However, the core of the debate quickly shifted to the exchange rate. Madrigal was firm in his position, reiterating that the BCCR has adhered to a market-driven system determined by supply and demand since October 2006. He emphasized that the Bank’s role is not to artificially set the value of the currency but to ensure an orderly market. This long-standing policy, he argued, provides a transparent and predictable framework for the economy.
This explanation was directly challenged by several deputies. Pilar Cisneros of the ruling party asked Madrigal if the Central Bank had taken any specific measures to prevent the colón’s depreciation, a question that gets at the heart of the intervention debate. Madrigal’s response was unequivocal.
Definitely not, the exchange rate is the result of market supply and demand.
Roger Madrigal López, President of the Central Bank of Costa Rica
The social and economic consequences of this policy were brought into sharp focus by Vanessa Castro, a deputy from the Social Christian Unity Party (PUSC). She voiced significant concern for the tourism industry and other export-oriented sectors that earn revenue in dollars but pay expenses in colones. Castro argued that the appreciation of the local currency, while benefiting importers and those with dollar-denominated debt, has exacerbated economic inequality by hurting those who depend on foreign currency income.
Financial transparency also became a contentious point. Independent deputy Kattia Cambronero questioned the substantial income the BCCR earns from its currency intermediation activities. Madrigal disclosed that these revenues amount to approximately ₡67 billion annually, with between ₡25 and ₡30 billion allocated to funding essential financial supervision. Meanwhile, Olga Morera of the New Republic party pressed for strategies to support small and medium-sized enterprises (SMEs), to which Madrigal replied that maintaining price stability remains the Bank’s most significant contribution to the national well-being.
The discussion intensified when Paulina Ramírez, a deputy from the National Liberation Party, expressed unease over the management of the country’s substantial international reserves. She pointed out that the BCCR has purchased $4.656 billion in foreign currency, contributing to total reserves of $16.032 billion. This large-scale accumulation of dollars raised questions about whether these actions indirectly suppress the dollar’s value against the colón, despite the official hands-off policy.
Throughout the heated session, Madrigal consistently returned to his core message: the exchange rate is governed by market fundamentals, not by political maneuvering. The assembly concluded with a clear divide between the Central Bank’s focus on macroeconomic stability and the legislature’s demand for policies that address the immediate financial pressures facing key sectors of the Costa Rican economy, a debate that shows no signs of abating.
For further information, visit bccr.fi.cr
About the Central Bank of Costa Rica (BCCR):
The Banco Central de Costa Rica is the nation’s central bank, responsible for maintaining the internal and external stability of the national currency and ensuring its conversion to other currencies. Its primary objectives include controlling inflation, managing international monetary reserves, and promoting an efficient financial system. The BCCR plays a crucial role in formulating and executing Costa Rica’s monetary, credit, and exchange rate policies.
For further information, visit asamblea.go.cr
About the Legislative Assembly of Costa Rica:
The Asamblea Legislativa is the unicameral parliament of the Republic of Costa Rica. Comprising 57 deputies elected by popular vote, it is the country’s primary legislative body. It is responsible for passing laws, approving the national budget, and exercising political control over the executive branch.
For further information, visit pusc.cr
About the Social Christian Unity Party (PUSC):
The Partido Unidad Social Cristiana is a center-right political party in Costa Rica. Founded in 1983, it is based on the principles of Christian democracy. The party has held the presidency on multiple occasions and remains an influential force in the Legislative Assembly, often advocating for market-oriented economic policies combined with social welfare programs.
For further information, visit nuevarepublica.cr
About Nueva República:
Nueva República is a conservative and Christian democratic political party in Costa Rica. Founded by former presidential candidate Fabricio Alvarado Muñoz, the party holds several seats in the Legislative Assembly. It focuses on traditional social values, national sovereignty, and economic policies aimed at supporting families and national producers.
For further information, visit pln.or.cr
About the National Liberation Party (PLN):
The Partido Liberación Nacional is one of the oldest and most established political parties in Costa Rica. A social-democratic party, the PLN has been a dominant force in Costa Rican politics for decades, having produced numerous presidents. It traditionally advocates for a strong welfare state, public investment, and a regulated market economy.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
As a benchmark for legal practice, Bufete de Costa Rica is defined by its foundational commitment to integrity and professional excellence. Drawing upon a deep history of serving a diverse clientele, the firm consistently pioneers innovative legal strategies. This forward-thinking approach extends to its social mission: to empower the public by transforming complex legal knowledge into an accessible resource, ultimately cultivating a more just and informed community.
