The Tico Times Online Daily Page

Daily Edition: San José, Costa Rica, August 13, 2003

NO ANSWERS: Roberto Tovar appears before Congressional committee, but says he knows nothing about the "lost" election accounts. See related story.

President's Chief Advisor: Economy
Showing Strong Signs of Recovery
Despite the ongoing U.S. recession and negative growth forecasts for most Latin American countries, the Costa Rican economy grew significantly during the first half of the year and is expected to finish 2003 with 4.4% growth, President Abel Pacheco's top economic advisor Ronulfo Jiménez announced Tuesday.
(Click for more)

Foreign Minister Denies Role in
Campaign Financing Scandal
Foreign Minister Roberto Tovar appeared before a Congressional hearing today and denied allegations that he was in charge of President Abel Pacheco's "lost" bank accounts, containing illegal foreign campaign donations funneled into his 2002 election campaign.
(Click for more)

Banana Sector Reports Strong
Growth in First Half of Year
Despite torrential rain storms that flooded banana plantations in December of last year, the country's banana export sector bounced back during the first half of the year, exporting 4% more than during the same period last year, reported the daily La República.
(Click for more)

August 13

Making a Gift for Mothers' Day
Pancita invites all children to the class “Gift for Mom”. Free, at 2 p.m., at Librería Internacional in Alajuela. Info: Laura Valverde 258-0330.

Editus in Concert
Recent Grammy Award-winning trio Editus performs its repertoire. Ricardo Ramìrez (violin), Edìn Solìs (guitar), and Carlos “Tapao” Vargas (percussion) will delight your ears with their talent. At 10 p.m. at Jazz Cafe, San Pedro. Info: 253-8933, jazz-cafe@racsa.co.cr

Café Concert
A show to benefit disable people Aug. 12,13,14 at 8 p.m. at Teatro la Comedia. Info: 233-2170 or Dania Fernàndez: 289-6930.

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Optimism: Intel and other high-tech companies are fueling Costa Rica's economic recover.
TT Photo / AFP

President's Chief Advisor: Economy Showing Strong Signs of Recovery
By Fabián Borges
Tico Times Staff
fborges@ticotimes.net

Despite the ongoing U.S. recession and negative growth forecasts for most Latin American countries, the Costa Rican economy grew significantly during the first half of the year and is expected to finish 2003 with 4.4% growth, President Abel Pacheco's top economic advisor Ronulfo Jiménez announced Tuesday.

"During the first half of the year, the economy showed strong signs of recovery," Jiménez told reporters in a rare public appearance following Tuesday's weekly cabinet meeting. "The Monthly Index of Economic Activity grew 6.3% during the first semester. Excluding Intel and other high-tech companies, it grew 4.6%."

Central Bank officials traditionally warn against reading too much into the monthly growth index's behavior. For example, in 2000 the index fell 1.0% but real GDP grew 1.8%, while in 1998 the index jumped 10.2% while GDP rose just 8.4%. However, with no other measurement of GDP trends available monthly, the index is seen as a key indicator of the direction the economy is taking.

Since 1999, the GDP excluding the high-tech sector, has grown at a rate of around 3% a year -- far less that the average of 6% reported during most of the 1990s. Jiménez is confident these figures are a sign of better times ahead and that the benefits of the growing economy will begin to trickle down to workers and families sometime during the second half of the year.

"Our estimates are conservative, we don't want to overstate the growth and create false expectations," he said. "But this is an important accomplishment for the country. We need to keep a close eye on the economy to make sure it maintains this pace during the remainder of the year.

"The growth is in its initial phase, most families probably aren't feeling its effects," he added. "We need to be responsible to make sure it continues and translates into new jobs and more money in people's pockets."

The economy's growth is attributed mainly to exports, which grew 22.8% compared to the first half of 2002 -- totaling nearly $3.2 billion. An increase in the international price of coffee and bananas and a surge in exports of non-traditional crops such as melons and pineapples to the European Union have helped the agriculture sector recover after two years of practically negative growth.

While not as strong as last year, construction grew about 5% in the first half, industrial production, commerce and services by about 4%.

In recent weeks, several business chambers have pointed out that a sharp contrast exists between the situation facing companies that produce for the local market and those that export. They argue that the recent wave of economic growth includes only a small fraction of the country's businesses and that most companies, nearly 95%, depend on the local market, which is not showing any signs of recovery. (TT, July 24)

Overall, the export surge helped reduce the country's trade deficit to $665 million. Total imports grew 5.7% to $3.8 billion.

"The increase in imports was caused by high oil prices earlier in the year and by an increase in purchases of capital goods and raw materials - a sign the country is increasing its productive capacity," he explained. "Consumer goods' imports didn't increase, which shows the growth has not yet reached all sectors of the economy."

The Central Bank's monetary reserves grew to $1.6 billion in June. Inflation for the first seven months of the year reached 5.18% and remains on track to meet the Central Bank's original estimate of 10% for the year.

The increase in reserves and controlled inflation prompted the Central Bank to lower interest rates last week. Interest rates have dropped 2.5% since December to 15.5%.

"Lower interest rates have played an important part in increasing production, stimulating investment and providing relief for home owners," he said.

The government is expecting to end the year with a fiscal deficit equal to 4.1% of the GDP, which could drop to 3.2% in 2004. These estimates don't include the potential increase in revenues the government will receive if its Fiscal Reform Package is approved by Congress.

"The economy is performing positively despite adverse international conditions," he explained. "So far, in 2003, the country is growing faster than the international economy and has surpassed our original estimates.

"Our economy is proving its stability and resilience in adverse conditions," he concluded. "However, further efforts to reduce the fiscal deficit, such as the tax plan, must go into effect to make sure this growth is sustained and has a real long-term impact on the country's population."

During a public address broadcast last night on national television and radio Pacheco described the growth as the result of "discipline, austerity and maintaining a clean house".

"These figures will have a social impact. They will translate into more jobs and a more stable cost of living," he said. "Costa Ricans, these numbers are not projections, they are results, but we must not rest on our laurels.

"In order to make these results permanent and make sure they improve the quality of of life of all families, we will need the support of the Congress," he argued. "The fiscal reform package they are currently studying is the instrument that will guarantee that those who are benefiting the most from this economic growth share their wealth with those who need it the most. Everyone must be taxed fairly."

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Foreign Minister Denies Role in
Campaign Financing Scandal
By Jon Gambrell
Tico Times Staff

Foreign Minister Roberto Tovar appeared before a Congressional hearing today and denied allegations that he was in charge of President Abel Pacheco's "lost" bank accounts, containing illegal foreign campaign donations funneled into his 2002 election campaign.

During a roughly 20-minute statement before congressional deputies yesterday morning,
Tovar said his role was limited only to paying the expenses of the presidential bid

"I was the leader of no one and I was the leader of nothing," Tovar said. "I was never, never the intellectual author of any of the finances."

Tovar's statement, and answers to later questions from deputies, sharply contrasted recent allegations by Rodolfo Montero, ex-treasurer of Pacheco's campaign. Montero claimed he only acted only with Tovar's permission.

Tovar said party treasurer Fernán Guardia might be able to fill in the missing pieces of the "lost account" puzzle.

Pacheco's campaign, which allegedly illegally accepted millions of dollars from foreign contributors, came under fire when Legislative Deputy Humberto Arce, leader of the Patriotic Parliamentary Bloc, demanded information about Leilabel S.A., a private bank account in the name of Pacheco and his wife, Leila Rodríguez. Arce claims Leilabel S.A., along with Bayamo S.A., an International Bank of Costa Rica account opened in Panama, and other private accounts controlled by Pacheco, funneled more than $6 million illegally into his election campaign (TT Aug. 8; Daily Page Aug. 1).

"Don Abel Pacheco had no part in the finances of the campaign," Tovar stressed. "He was just out to get the votes, which he did very well."

Despite Arce's fiery allegations, his exchanges with Tovar were civil during the hearing.

Read More in Friday's The Tico Times.

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Going Bananas: The banana sector is finally starting to bounce back after a prolonged slump.
TT Photo / AFP

Banana Sector Reports Strong Growth in First Half of Year

Despite torrential rain storms that flooded banana plantations in December of last year, the country's banana export sector bounced back during the first half of the year, exporting 4% more than during the same period last year, reported the daily La República.

According to preliminary estimates made by the National Banana Corporation (CORBANA), between January and June, the country exported 50 million 40-pound crates of bananas. Total revenues reached $261 million - 6% more than during first half of last year.

Last year, the country exported $462.4 million in bananas, which constituted 8.8% of the country's total exports. Export taxes on bananas provided the government with $7.1 million in 2002.

If current production levels are maintained during the remainder of the year, total export figures are expected to be between $90 and $92 million.

The increase in revenues is the result of higher international banana prices and an increase in purchases of Costa Rican bananas by European distributor Fyfess, which has been purchasing 120,000 crates a week. Previously, the company bought only a small portion of its bananas from Costa Rica, doing business mostly with Asian and Caribbean countries.

Despite the good news, exporters are bracing for a difficult year. Traditionally, the second half of the year is characterized by increased production but lower international prices and product demand.

"As a result of last year's bad weather, some farms were ruined and lost their production," Agriculture Minister Rodolfo Coto announced during Tuesday's weekly cabinet meeting. "We're working to bail out most of the producers that were hurt by granting them credit certificates. But, for the most part, those involved in banana production are doing well."

Bananas are Costa Rica's largest agricultural export product. The sector generates 140,000 direct jobs and approximately 100,000 indirect ones. Costa Rica is the world's second largest exporter of bananas.

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