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Fitch Assigns 'BB' Rating to Costa Rica's
10-yr bond
Fitch Ratings, the international rating agency has today assigned a 'BB'
rating to the recent Republic of Costa Rica's
recent $250 million, 10-year bond issue.
The Rating Outlook is Negative.
Costa Rica's ratings are supported by its modest external indebtedness, a
successful diversification of the export base through significant foreign
direct investment flows, robust democratic institutions, and favorable
social indicators.
The rating is constrained by the 'twin deficit' problem facing Costa Rica.
The Negative Outlook reflects the high fiscal deficits and high level of
dollarization of the banking system in the context of a crawling peg
exchange rate regime that increases Costa Rica's financial vulnerability.
Moreover, the country has also been unsuccessful in making significant
progress on structural reforms, such as privatization of state-monopolies
and large national banks.
Last year Costa Rica's economy accelerated after three years of sluggish
growth thanks to the expansion of exports underpinned by solid growth in
Intel exports. However, the government was unable to use the opportunity of
higher growth to consolidate fiscal accounts sufficiently.
Despite the additional revenues arising from the Contingency Fiscal Plan,
the fiscal accounts remained under pressure due to higher spending.
Moreover, the Pacheco administration was unable to pass the comprehensive
tax reform in 2003, although the government remains committed to passing it
this year.
Going forward, a stabilization of Costa Rica's sovereign creditworthiness
will depend on the ability of the government to tackle fiscal deficits and
implement structural reform. A comprehensive tax reform, further
strengthening of bank supervision, especially of off-shore banking
activities, and progress on privatization would be viewed favorably by
Fitch.
By contrast, continued high fiscal deficit and back-peddling on structural
reform could further undermine the credibility of the policy framework and
increase the pressures on the exchange rate and for dollarization.
Sudden exchange rate devaluation would mean a higher government debt burden,
given Costa Rica's substantial level of dollar-denominated government debt.

Central Bank Forecasts
Lower Inflation
The Banco Central de Costa Rica says that inflation will decrease this year
and is predicting a inflation rate of 9%. Inflation in 2003 was 9.87%.
This is the first time in years that inflation rate has been in the single
digits, in the past hovering in the 10% area.
The Bank also released predictions in the Gross National Product (GNP) - the
total production of products and services. It says that the GNP will
increase by 4.4% in 2004 and the national deficit will be maintained at
4.1%, same as last year.
The predictions by the Bank does not take into account the proposed Trade
Agreement, for it is adopted the Bank will have to revise it's predictions,
a Bank spokesperson said.

Intel Unveils Coffee
Nanoprocessors
Intel announced that it will join
forces with a Costa Rican coffee exporting company, Café Britt, to produce a
coffee-nanoprocessor hybrid, to increase productivity among computer
engineers and other coffee addicts.
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"We got the idea after we
set up a processor manufacturing plant in Costa Rica," explained Intel
representative, Gerald Meyers. "We had to choose a country in which to
build the plant, and when the Costa Rican government offered management
a year's supply of coffee we couldn't refuse.
We loved the coffee so much, we wanted to incorporate it into our
technology. However, our Coffee-Powered processors didn't work too well,
so we went the other way around and incorporated our technology into
their coffee." |
The idea behind Pentium Coffee is simple.
Nanoprocessors are mixed in with the coffee, and swallowed by the consumer.
These microprocessors enter the bloodstream, travel around the body, and
linked to the nervous system. These nanoprocessors aid the brain by
performing complex mathematical operations. The processor’s performance is
measured in CAFS (Complex Arithmetic Functions).

Central American Countries Strengthen Efforts Against Mad Cow Disease
The Central American countries, along
with Mexico and the Dominican Republic, have reached an agreement to
strengthen measures against bovine spongiform encephalopathy (BSE) or mad
cow disease, a senior Costa Rican official said Wednesday.
These countries, which have banned the US beef, would analyze other products
to determine their risks, said Oscar Gutierrez, director of the Regional
Agricultural Sanity Organization.
They would review measures already taken against mad cow disease and would
study the possibility of banning animal feed from the United States,
Gutierrez said.
The agreement was reached Tuesday at a meeting in El Salvador attended by
representatives of Central America, Mexico, Dominican Republic and Belize,
Gutierrez said.
Central American countries, including Guatemala, Honduras, Nicaragua and
Costa Rica, imported a total of 2,007 tons of beef worth $3.711 million US
dollars from the United States in 2002, according to the secretariat of the
Central American Economic Integration.
Since the discovery of mad cow disease in a dairy cow in Washington state on
Dec. 23, 2003 -- the first case yet reported in the United States -- US beef
exports have been shut down and beef prices in the United States have
dropped sharply.

Illegal-Alien
Smugglers Caught in North Dakota:
Latino immigrants admit paying thousands of
dollars for unlawful entry
U.S. Federal authorities say two
suspected smugglers and nearly a dozen illegal aliens have been taken into
custody following an attempt to enter the U.S. through North Dakota.
The Grand Forks Herald reports Carlos Rivera-Erazo was arrested at the
Greyhound bus station in Grand Forks with three aliens, while another, Oscar
Bonilla-Montero, was nabbed while attempting to pick up eight aliens near
the border at Walhalla, N.D.
U.S. Attorney Nick Chase says a tip from Canadian authorities led to the
arrest of Bonilla-Montero, a native Costa Rican who became a legal citizen
of Canada.
Officials learned he would be dropping off aliens on the Canada side, after
which he would drive across the border legally and pick them up once inside
the U.S.
Bonilla-Montero was arrested alone by U.S. Border Patrol after entering
North Dakota. KYFR-TV in Bismarck reports the eight illegal aliens he was
looking to retrieve were found huddling together for warmth carrying
walkie-talkies.
Two of the illegals were reportedly from the Dominican Republic and the
other six from Costa Rica. The Herald says when debriefed, the aliens
admitted they paid the suspect up to $3,000 to be smuggled into America.
Meanwhile, Rivera-Erazo, a citizen of El Salvador, was taken into custody
after a Border Patrol agent saw him talking with Xinia Elizabeth
Chinchilla-Ruiz of Costa Rica and her two children at the bus station.
According to the arrest affidavit, Rivera-Erazo claimed to be a legal
resident, but Chinchilla-Ruiz admitted she and her children didn't have
valid documents. She then admitted to paying the alleged smuggler $4,500 to
get her from Windsor, Ontario, near Detroit to Newark, New Jersy, where she
has relatives.
Her kids have been released to relatives who are legal U.S. residents.
Federal officials say the illegals would be detained for several weeks to be
witnesses against the accused smugglers, but would later be deported out of
the country.
The suspects face a minimum of three years prison if convicted.
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Oscar Berger
sworn in as Guatemala's new president
Businessman and former Guatemala City
mayor Oscar Berger was sworn in as Guatemala's new president and prepared to
tackle the country's widespread poverty, limited economic resources and
pressing health care, security and education needs.
Berger, 57, officially took office on Wednesday at the Miguel Angel Asturias
theater under tight security in effect since Saturday.
Representatives from various international organizations and some 150
countries were on hand for the swearing-in ceremony, including the
presidents of Bolivia, Colombia, Costa Rica, El Salvador, Honduras,
Nicaragua, Panama and Saint Kitts.
The brother of US President George W Bush, Florida Governor Jeb Bush,
represented the United States at the ceremony.
Berger, a conservative, defeated fellow businessman Alvaro Colom with more
than 54 per cent of the vote in the Central American country's December 28
runoff presidential race.
Berger succeeds Alfonso Portillo in leading the country of some 11.2 million
people -- the majority of whom are living in abject poverty.
His task of ruling the country will be complicated by the fact that his
party, the National Grand Alliance does not control parliament.

Leaders
Conclude Americas Summit Without Consensus on FTAA
The leaders of all Western Hemisphere
nations except shunned Cuba signed a document here Tuesday committing them
in general terms to fight corruption and poverty, but providing few concrete
new tools to do so.
After intensive negotiations and two days of dialogue among the leaders,
this Summit of the Americas concluded with anti-globalization protesters
burning U.S. President George W. Bush in effigy outside and Venezuela
voicing skepticism about the goal of creating the U.S.-sponsored Free Trade
Area of the Americas by early 2005.
Although the text only alludes to the "balanced results" of the FTAA
ministerial meeting in November, Venezuelan President Hugo Chavez said the
deadline to begin the process "is too short." "It's just around the corner,"
said Chavez, expressing his reservations to his fellow heads of state and
government about this point.
The inclusion of the timetable for the creation of the FTAA became one of
the most conflictive issues in negotiating the text, after Brazil and
Venezuela argued that since the summit was supposed to focus on social
development, the trade agreement should not have been tackled at the
meeting.
Brazilian President Luiz Inacio Lula da Silva said he finally agreed to sign
a text including this topic because "it's merely a continuation of what we
decided in Miami" during the November meeting.
For his part, Chavez appeared upset the leaders paid no heed to his proposal
to create an international humanitarian fund aimed at helping countries in
"social emergencies." In the final text, however, the heads of state and
government agreed to "take note" of the discussions about his initiative.
Another controversial issue was the U.S. proposal to exclude from future
summits countries whose fight against corruption is deemed inadequate. Most
leaders turned down the measure, arguing that evaluating this would prove
problematic.
However, corruption was among the main topics addressed in the Nuevo Leon
Declaration - named after the Mexican state of which Monterrey is the
capital - where the assembled leaders pledged to "deny refuge to corrupt
officials, those who corrupted them and their assets." At the meetings that
tackled the stated objectives of the conclave - equitable growth, social
development and democratic governance - the summiteers also discussed
initiatives to improve the living conditions of their peoples.
According to most of the leaders, the Nuevo Leon Declaration places
sufficient emphasis on the social aspects of the problems facing their
peoples and establishes measures to achieve more equitable growth.
The text also touches upon encouraging small businesses, deemed as one of
the driving forces of Latin American economies.
The heads of state and government hailed the Inter-American Development
Bank, which at the summit unveiled plans to triple its small business loans
over the next four years.
The declaration includes a commitment to cut by half by 2008 the charges for
remittances sent home by immigrants.
Likewise, the text calls on "all creditors" to take part in programs to
reduce the debts of the poorest Latin American countries.
The leaders also pledged to step up the fight against terrorism and take
"all the measures needed to combat" terrorists and those who finance them.

Chavez's
Clowning at Summit Hits a Chord in Latin America
Latin American bad boy Hugo Chavez hammed it up at the recently concluded
Summit of the Americas in Monterrey, Mexico, comparing the barren surface of
Mars to what poor countries look like after the IMF gets done with them. But
like a court jester, the writer says, the leftist leader can bring up
uncomfortable truths.
Hugo Chávez, Venezuela's voluble president, acted the class clown at the
recently concluded Summit of the Americas in Monterrey, Mexico, and many in
Latin America lapped up his antics at the expense of the United States and
its allies.
The leftist leader trashed protocol, ridiculed the event as a mere photo-op
and "a waste of time," and cracked jokes as often as possible, most notably
a barbed comment aimed at U.S. National Security Advisor Condoleezza Rice.
Chávez's quips got lengthy coverage in Latin American newspapers. It was
obligatory for correspondents at the summit, even those working for fairly
conservative major media like Mexico City's Reforma and Brazil's O Globo, to
include a sidebar on the Venezuelan's antics.
It's not just the irreverence that is striking a chord, but the truth many
perceive in his remarks. Like any court jester, Chávez brings up
uncomfortable realities, or at least hyperboles that graze uncomfortably
close to truth.
According to the Buenos Aires daily Pagina 12, reporters were awaiting the
conclusion of a key meeting between the head of the International Monetary
Fund (IMF) and President Nestor Kirchner of debt-crushed Argentina, when
Chávez passed by.
"Have you seen the photos that they've been sending from Mars?" he asked the
crowd, referring to images of a flat, scorched-looking landscape the U.S.
space vehicle has been transmitting.
Chávez's punch line: "It looks like the IMF has been there too."
Free market reforms and onerous debt payment schedules devised by Washington
D.C. and the IMF--where U.S. officials wield the decisive influence-have
worsened inequality and ravaged economies throughout Latin America. The
region's economies actually shrank in the last six years as reforms took
hold, and 44 percent of Latin Americans now live in poverty, according to
the U.N.'s Economic Commission for Latin America and the Caribbean.
"We still have time to turn back, but we are there, at the gates of hell,"
Chávez said of the situation, pushing for his roundly ignored proposal for
an international humanitarian fund for Latin America.
He exaggerates. But it is this stark economic reality that formed the urgent
backdrop to the talks, not the U.S. offers of a temporary worker program
aimed at placating Mexico or its usual offers of token aid.
Like the student provocateur who speaks aloud what has crossed the mind of
the entire class, Chávez is not afraid of being singled out for U.S.
criticism. Mexico City's leftist La Jornada daily called him the "punching
bag" for U.S. officials.
But Chávez knew that behind closed hotel room doors many Latin American
delegations were probably nodding in approval and chuckling over his
remarks. His main allies, Argentina's Nestor Kirchner, and the influential
Brazilian President Luiz Inacio "Lula" da Silva, tempered their comments far
more than he did, but they join him in opposing much of the U.S. agenda,
including the Free Trade Area of the Americas and the embargo on Cuba.
Behind the scenes, Lula, who is South America's main power broker, shared a
warm embrace and a private lunch with Chávez.
Chávez's relations with other governments in the region serve as a barometer
of their current attitude towards Washington. Chilliest, if not positively
hostile, toward Venezuela are key U.S. allies Chile, Mexico (which already
have free trade deals with United States) and Colombia (the recipient of
billions in U.S. financial and military aid).
"We're not afraid, we're not afraid of anything," were Chávez's first
combative words upon arrival, responding to accusations by the White House
that he was plotting, with Cuba's Fidel Castro, to "destabilize" Uruguay,
Ecuador and Bolivia, countries simmering with growing leftist or indigenous
movements.
"I don't have anything to do with that. The real destabilization is caused
by neoliberalism." Chavez added. Neoliberalism is the popular shorthand for
Washington's "market-friendly" prescriptions.
Castro and Chávez make no secret of their contacts with like-minded
political leaders across the Americas. The popular view is that whatever
mischief their alliance has cooked up pales in comparison with the impact of
the austerity measures imposed by the IMF.
In his summit address, President George W. Bush excoriated Cuba and said
oil-rich Venezuela, Bolivia and Haiti were places where democracy was at
"risk." Condoleezza Rice already had warned Chávez that he must allow a
recall process against him to go through "unhindered, unfettered."
Chávez bristled at the U.S. hectoring and the insinuation that he would try
to sabotage the recall. He told the Associated Press that Rice must be
"illiterate" and recommended she read up on Venezuela's Constitution.
In 2002 the democratically elected Chávez was overthrown for 48 hours by a
business-military coup that was nodded at by the White House. Most regional
leaders, however, howled that democracy had been subverted. The Venezuelan
opposition is now counting on the recall to oust him.
Bush, backtracking, said U.S. concerns over the recall centered merely on
the "integrity" of the process.
Chávez approved. "That," he said, "is a more intelligent statement."
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