Bill to curb short-term investments could be voted on next week

August 22, 2013

Members of Costa Rica’s legislative Financial Affairs Commission on Wednesday finished discussing all motions filed against a bill aimed at discouraging short-term banking investments from abroad.

Members of the ruling National Liberation Party expect that the bill, drafted last January by Costa Rica’s Central Bank, will be voted on next week, which is the last week of the Legislative Assembly’s extraordinary sessions period for 2013.

But approval could face obstacles as Libertarian Movement Party lawmaker Patricia Pérez recently told the weekly El Financiero that she will resubmit for discussion all 24 motions she previously filed in the Financial Affairs Commission, meaning that a first round of voting on the bill would not occur until at least Thursday.

Pérez also said she would delay the voting of a second round of debate for up to one month, as she is “currently seeking the required support of fellow lawmakers to submit the bill to consultation before the Constitutional Chamber of the Supreme Court, or Sala IV, to determine its constitutionality.” According to legislative rules, a request for submitting the bill to consultation before the Sala IV must be supported by a minimum of 10 lawmakers.

The Libertarian lawmaker said that the “current draft of the bill does not clearly define what short-term or speculative capital is,” which in her opinion “will open a loophole.”

Finance Minister Édgar Ayales in January presented lawmakers the bill to discourage short-term foreign investment that takes advantage of the country’s high interest rate in colones. Ayales at the time said one of the most important measures would be taxing foreign capital entering the country by up to 30 percent.

The bill also would give the Central Bank the authority to set rate hikes, define the currency to which it would apply, the terms and maturity of investments and the period during which these measures would apply.

Central Bank President Rodrigo Bolaños supports the bill, saying that “while the amount of capital from abroad this year has seen a decrease, [the bill] is still needed as a valuable tool that could be useful at any time.”

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