- Category: Business
- Published on Wednesday, June 01 2011 01:49
- Written by Rod Hughes
- Hits: 890
The tourism and farm sectors a few weeks ago asked the government to declare a crisis due to the strength of the colon, although the Chamber of Tourism called the plaintive cry for help "premature."
But Vice President Luis Liberman is having none of this alarmism. "You can't expect all sectors to recover from a crisis at the same rate," he told reporter Leticia Vindas of the business newspaper El Financiero.
Liberman has described himself to The Tico Times English-language newspaper as the elected official who specializes in economy in the Chinchilla Administration. As such, he is a powerful voice in advising President Laura Chinchilla who, unlike her predecessor Oscar Arias, is not blessed with an economics degree from the prestigious London School of Economics.
The tourism and agricultural sectors complain that a strong colon vs. the weakened dollar cripples competitivity of agricultural exports and the income of hotels. "We mustn't confuse competitivity with profitability," Liberman says.
"The North American definition (of recovery) says that if you come out of a recession with two quarters of growth, you're already out," says Liberman, "However it appears to me that this definition isn't enough after a recession as severe as we had."
"After a crisis not all sectors emerge at the same time for several reasons..." he added, "Generally, construction is the first to go into crisis and the last to emerge."
The tourism sector had a first quarter this year showing a healthy increase, Liberman notes. He said that the strong colon uncovered the fact that many tourism operations were over-extended in debt and that banks only refinanced those with the best chances to pull out of the hole.
As for agriculture, he said the Administration has been working with export farmers on lowering costs of such items as packaging. But in answer to doubts about agricultural competition being crippled here, he noted that Moin is the largest port for fruit exports in Latin America.
As for criticism that the Central Bank has let the colon float too much, he answered sharply, "Excuse me! But the bank has bought up $600 million in colones on the (exchange) market and buys every time the colon touches the base price."
If the Central Bank could invest a billion dollars to bring the colon up from the 500 colon per dollar base, who would pay, he asks. "If you devaluate to 550 colones, it raises the cost of labor, electricity, fuel and everything else," Liberman said.