Central Bank Blamed For
High Inflation
The Banco Central de
Costa Rica (BCCR) is
being blamed for the
high inflation in Costa
Rica, mainly due to its
failure to provide a
stable economic policy
to reduce inflation and
to contol interest rates
and the exchange rate.
This according to
economist Jorge Guardia.
Guardia along with other
economists agree that
the high inflation in
the country is due to
the poor management of
the Central Bank and its
economic policies
adopted in November
2006, when it announced
the "bandas cambiarias"
(exchange band), and we
are now seeing the
laggard effect of
liquidity.
The inflation rate for
the month of November
was 14.38%, according to
the Instituto Nacional
de Estadística y Censos
figures released this
week.
For his part, fellow
economist, Fernando
Naranjo, said that the
Cental Bank should
reform its exchange rate
criterion, to take into
account inflation.
Naranjo added that he
has nothing personal
against the Central Bank
managers, it's that it
will be very difficult
in the coming year to
maintain the bandas
cambiarias mechanism and
that the Central Bank
should be thinking of
other ways.
For his part, the
president of the BCCR,
Francisco de Paula
Gutiérrez había,
maintains that the
exchange bands are only
a transition to an
administrated floating
rate.
Both Naranjo and Guardia
agree that production in
2009 will be lower,
income will be lower and
exports will increase
only by 4%, as well the
country will see lower
foreign investment and
lower credit lines for
business.
"We are not in a crisis,
nor will we be. There
are worse", said Naranjo.
The economist added,
despite the world
economic crisis, the
impact in Costa Rica
will be light.
Naranjo predicts that
the Ministerio de
Hacienda (Finance
Ministry) may end up
with a slight surplus
for the second year in a
row and that inflation
in 2009 will be lower
than this year and there
will a more diversified
export market. |
