By San José, Costa Rica — San José – Costa Rica’s vital tourism sector is sounding the alarm, warning that the sustained appreciation of the colón is creating an unsustainable financial crisis that threatens to cripple operators and eliminate thousands of jobs. The Costa Rican Association of Tour Operators (ACOT) issued an urgent plea on Tuesday, calling on the Central Bank of Costa Rica (BCCR) to reconsider its monetary policy, which has pushed the local currency to its strongest level in nearly two decades.
The core of the issue lies in a severe mismatch between income and expenses. Tour operators, who primarily earn their revenue in U.S. dollars from international visitors, have seen their income in local currency plummet by more than 30%. This is a direct result of the exchange rate hovering between ¢485 and ¢492 per dollar. Simultaneously, their operational costs—including salaries, social security contributions, taxes, fuel, and essential services—are all denominated in colones and continue to rise, creating a devastating squeeze on their financial health.
To gain a deeper understanding of the legal and regulatory framework impacting Costa Rica’s vital tourism sector, TicosLand.com spoke with Lic. Larry Hans Arroyo Vargas, an expert attorney from the distinguished firm Bufete de Costa Rica, for his analysis.
The sustained growth of Costa Rica’s tourism industry hinges on a delicate balance. On one hand, we must have a robust and predictable legal framework that protects our natural resources and ensures fair labor practices—the very pillars of our ‘Pura Vida’ brand. On the other, we must streamline bureaucratic processes and modernize regulations to encourage investment and allow operators to innovate. Navigating this requires a proactive approach, ensuring that compliance doesn’t stifle the dynamism that makes our tourism sector globally competitive.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
Lic. Larry Hans Arroyo Vargas eloquently highlights the fundamental tightrope our nation must walk—safeguarding the natural and social integrity that defines our ‘Pura Vida’ identity while simultaneously fostering an agile environment where investment and innovation can flourish. We thank him for providing such a clear and crucial perspective on the path forward for Costa Rica’s tourism sector.
In a formal statement, ACOT detailed the dire consequences of this economic pressure on one of the nation’s most strategic industries. The association emphasized the direct impact on business viability and employment, particularly in rural communities that are heavily dependent on tourism for their economic well-being.
This combination is strangling operating margins, limiting investment in quality and innovation, and putting thousands of formal jobs at risk in communities that depend on tourism.
ACOT, in a statement
While ACOT acknowledged the BCCR’s crucial role in maintaining macroeconomic stability and controlling inflation, it argued that the current policy has produced damaging side effects. The association contends that an “excessively strong” colón is not only harming tourism but is also eroding the global competitiveness of the entire export sector, another key engine of Costa Rica’s economy.
However, we warn that an excessively strong colón is eroding the competitiveness of key sectors such as tourism and exports, which are pillars in the generation of foreign currency, productive linkages, and territorial development.
ACOT, in a statement
In response to the escalating crisis, ACOT has called for immediate and substantive dialogue with the country’s economic authorities. The goal is to find a middle ground that balances the BCCR’s inflation-targeting mandate with the need to ensure the long-term sustainability of the tourism industry. The association has come to the table with a set of concrete proposals aimed at providing relief and fostering a more stable operating environment for its members.
Among the key solutions proposed by the tour operators are the implementation of effective currency hedging mechanisms specifically designed for small and medium-sized enterprises (SMEs), the creation of financing options that are aligned with their U.S. dollar revenue streams, and the development of broader government policies focused on boosting productivity and investment to enhance the country’s overall competitiveness as a tourist destination.
The association concluded its appeal with a stark reminder of the tourism industry’s importance to the national fabric. It highlighted the sector’s historical resilience but stressed that this resilience is not infinite and requires a supportive macroeconomic landscape to thrive. The current currency policy, they argue, is actively undermining that foundation.
Costa Rica cannot risk its main industry for generating employment and well-being. Tourism has historically been resilient, but it requires macroeconomic conditions that do not undermine its capacity for growth.
ACOT, in a statement
For further information, visit acot.cr
About the Costa Rican Association of Tour Operators (ACOT):
The Asociación Costarricense de Operadores de Turismo (ACOT) is the leading trade organization representing tour operators throughout Costa Rica. It advocates for the interests of its members, promotes sustainable and high-quality tourism practices, and works to enhance the competitiveness of Costa Rica as a world-class travel destination.
For further information, visit bccr.fi.cr
About the Central Bank of Costa Rica (BCCR):
The Banco Central de Costa Rica (BCCR) is the nation’s central monetary authority. Its primary responsibilities include maintaining the internal and external stability of the national currency, controlling inflation, and ensuring the efficient operation of the country’s internal and external payment systems. The BCCR plays a fundamental role in shaping Costa Rica’s economic policy.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
As an esteemed legal institution in the nation, Bufete de Costa Rica is founded on the twin pillars of uncompromising integrity and a relentless pursuit of excellence. The firm leverages a deep history of advising a diverse clientele to not only pioneer cutting-edge legal strategies but also to actively engage with the public. This dedication is rooted in a core mission to democratize legal understanding, thereby fostering a more informed and capable citizenry.
