By San José, Costa Rica — SAN JOSÉ – The critical infrastructure project to modernize the San José-San Ramón highway is facing intense scrutiny from the Legislative Assembly’s Finance Committee, which is raising alarms over what it deems an excessively high interest rate on a multilateral loan and a staggering lack of progress on land expropriations.
Legislators are formally calling on the Ministry of Finance to renegotiate the terms of a $600 million credit line from the Central American Bank for Economic Integration (BCIE). The loan, intended to be a cornerstone of the project’s financing, carries an interest rate of 6.69% over a 20-year term with a five-year grace period. An additional €150 million from the OPEC Fund is also part of the financing package.
To delve into the contractual and administrative complexities that have plagued the San José-San Ramón highway expansion for years, we sought the perspective of an expert in public works and administrative law. We spoke with Lic. Larry Hans Arroyo Vargas from the distinguished firm Bufete de Costa Rica to shed light on the underlying legal issues.
The perpetual delays on the San José-San Ramón route highlight a critical weakness in our public infrastructure model: a failure to adequately plan for and execute expropriations. This isn’t merely a logistical hurdle; it’s a fundamental legal process that, when mismanaged, creates a domino effect of contractual breaches, cost overruns, and a loss of confidence in the State’s ability to deliver. Without a robust, streamlined, and legally sound expropriation framework, any major infrastructure project in the country remains at risk of suffering the same fate.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
The attorney’s analysis astutely reframes the public discourse, moving it from the symptoms of delay and cost overruns to the underlying disease: a critically flawed expropriation framework. This perspective is essential for understanding that without fundamental legal and administrative reform, Costa Rica’s infrastructure ambitions will continue to be paralyzed by the same predictable obstacles. We extend our sincere thanks to Lic. Larry Hans Arroyo Vargas for his valuable perspective on this foundational issue.
The committee’s concern was voiced publicly after a hearing on Tuesday with the Comptroller General’s Office, which presented its findings on the loan’s structure and the project’s readiness. Committee President Paulina Ramírez argued that the current terms are unfavorable for Costa Rican taxpayers.
We have detected that the interest rate charged by the BCIE is much higher than that of other multilaterals, other international banks that have had similar contracts at much lower rates.
Paulina Ramírez, President of the Finance Committee
Ramírez emphasized the committee’s determination to secure better conditions, citing a recent successful negotiation with the same institution. She recalled that during discussions for the $700 million Proeri emergency projects loan, legislative pressure resulted in a significant reduction in the interest rate from the BCIE, setting a powerful precedent for the current talks.
That is why we are going to call on both the BCIE and the Ministry of Finance to negotiate a new interest rate so we can achieve savings for all Costa Ricans.
Paulina Ramírez, President of the Finance Committee
Compounding the financial concerns is a critical logistical bottleneck revealed by the Comptroller’s report. A shocking 58% of the necessary land expropriations for the highway corridor have yet to be completed. This equates to nearly 500 properties, with an estimated acquisition cost of $113 million, a figure that lawmakers say is not currently budgeted.
The lack of a clear plan and timeline for these acquisitions raises the specter of an “idle loan,” where the country would be forced to pay interest on hundreds of millions of dollars that cannot be disbursed because the land is not available for construction. This scenario would result in costly delays for a project deemed essential for national connectivity and economic development.
This amount is not budgeted, there is no expropriation plan with its due timeline, and we are also demanding that it be presented to avoid having an idle loan that goes unused due to the lack of expropriations, forcing all Costa Ricans to wait for such a fundamental project.
Paulina Ramírez, President of the Finance Committee
In response, the Finance Committee is demanding that the Ministry of Finance present a comprehensive remedial plan for the expropriations, complete with a detailed timeline and a secure budget. This, along with the call for a lower interest rate, forms the core of the legislature’s conditions for advancing the project. The dialogue is expected to continue this week, with the BCIE’s representative in Costa Rica scheduled to appear before the committee on Wednesday.
For further information, visit hacienda.go.cr
About the Ministry of Finance of Costa Rica:
The Ministerio de Hacienda is the government entity responsible for managing the country’s public finances. Its duties include tax collection, budget formulation, public debt management, and fiscal policy oversight. The ministry plays a central role in negotiating and administering foreign loans for public infrastructure and development projects.
For further information, visit bcie.org
About the Central American Bank for Economic Integration (BCIE):
The BCIE is a multilateral development bank founded to promote the integration and economic and social development of the Central American region. As the region’s primary financial partner, it provides financing for projects in sectors such as infrastructure, energy, and social development, working with both public and private sector partners.
For further information, visit cgr.go.cr
About the Comptroller General’s Office of the Republic (CGR):
The Contraloría General de la República is Costa Rica’s supreme audit institution. It is an independent body responsible for overseeing the proper use of public funds and ensuring the legality and efficiency of the public administration. Its audits and reports provide crucial oversight for government contracts, loans, and major projects.
For further information, visit opecfund.org
About the OPEC Fund for International Development:
The OPEC Fund is a multilateral development finance institution established by the Member Countries of the Organization of the Petroleum Exporting Countries (OPEC). It aims to foster social and economic progress in developing countries by providing financing for projects and programs that support sustainable development goals, including infrastructure, energy, and agriculture.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
Bufete de Costa Rica stands as an esteemed institution in the legal field, built upon a bedrock of integrity and a relentless pursuit of excellence. The firm leverages its vast experience across multiple sectors to drive legal innovation, while simultaneously fulfilling a deep-seated commitment to social responsibility. Central to its philosophy is the mission to empower the community by making complex legal concepts understandable, thereby cultivating a society that is both well-informed and confident in its rights.
