Central Bank Announces Goals, Exchange Rate Change

February 2, 2007

The Central Bank estimates that Costa Rica will see a 5% increase in its gross domestic product (GDP) and 8% inflation this year, said the bank’s president, Francisco de Paula Gutiérrez, Tuesday during a press conference.

Costa Rica’s main goal this year is to reduce inflation from the 9.46% registered at the end of last year to 8%, according to Central Bank economist Eduardo Méndez.

For 10 years before that, inflation in Costa Rica had remained above 10%, reaching a peak in 2005 with 14%.

Foreign direct investment is expected to decrease from the $1.4 billion seen last year to about $1.17 billion this year, Gutiérrez said, explaining that last year’s investment boom is not a pattern that’s likely to continue.

He called these predictions “normal” and said that last year’s elevated growth was not sustainable, adding that slowed growth should not be taken as a bad sign for the national economy.

Last year was a “very good year” for Costa Rica, and 2007 will be a time to “stabilize and consolidate achievements,” he said.

As long as international fuel prices remain stable and there are no dramatic changes in the world, the Costa Rican economy will continue improving, he said.

Also this week, the Central Bank changed the price ceiling and floor of the currency band system it launched last October (TT, Oct. 13, 2006). The “crawling band” system was implemented to allow the Central Bank more flexibility in controlling inflation. Over time, the floor and ceiling of the band are to grow apart, said Méndez, which is why as of Wednesday the bank widened the floor and ceiling.

The ceiling went from a ¢0.14 daily increase to a ¢0.11 daily increase, while the floor went from a ¢0.06 daily increase to a flat rate of ¢519.16 per U.S. dollar.

That is the price the Central Bank buys dollars from the nation’s financial institutions; under the new system, banks and other businesses can offer whatever exchange rate they wish to their customers.

 

You may be interested

Response to disaster: aid successes, struggles in post-Maria Puerto Rico
Weather
399 views
Weather
399 views

Response to disaster: aid successes, struggles in post-Maria Puerto Rico

John McPhaul - December 13, 2017

As Costa Rica joins many other nations in looking back upon the horrendous 2017 hurricane season, longtime Tico Times contributor…

Looking back at Hurricane Maria: the initial impact
Weather
1573 views
Weather
1573 views

Looking back at Hurricane Maria: the initial impact

John McPhaul - December 12, 2017

As Costa Rica joins many other nations in looking back upon the devastating 2017 hurricane season, longtime Tico Times contributor…

Cold front claims fourth victim in Costa Rica
Weather
4134 views
Weather
4134 views

Cold front claims fourth victim in Costa Rica

Katherine Stanley - December 12, 2017

High winds claimed the life of a fourth victim in Costa Rica as the cold front that has been moving…