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Time To Adopt Dollarization
In Costa Rica?
By John
Holtz
If there ever has been a good time to adopt
a dollar economy and abandon the beloved
colon; it is now!
Think of this: At an exchange rate of
somewhere around ¢520 colones to USD$1, the
worst news the hotels could learn from The
National Tourism Chamber (CANATUR) is that
during Semana Santa they can expect an 80%
or more occupancy. Until now, something they
have been praying for!
So why so many droopy faces?
Well, hotels charge in dollars as do car
rentals, tours companies, travel agencies,
etc but have to pay just about 100% of their
operational expenses in colons. They are
taking a big hit on the spread unless, of
course, they all raise their prices to
compensate and that’s inflationary. Even the
government feels the pinch since it receives
its 10% tax revenue, airport fees, and most
duties in USD.
The same is true for the construction
industry, the real estate industry and
export industry that in less than three
months have become uncompetitive in the
world market.
The only industry to benefit from the robust
devaluation of the dollar are those
importers who purchase in USD and resell
their products in colones. However, if they
need to resell in today’s dollar rate, they
too join our group of losers.
Who also benefit, for now, are the many
national tourists who will buy dollars with
colones. But the international tourist who
spends far more money on a vacation than the
nationals will keep their wallets pretty
tight especially when they will pay $1.16
for a cup of coffee and no refill or
purchase a can of Coke for $1.05 that costs
33 cents in the States.
No, this devaluation is not good for Costa
Rica.
The answer is to put pride behind us and
adopt the USD as our national currency. This
artificial duel system is (1) too easy to
manipulate and (2) causing economic havoc.
Or, we can go back to the old system with
mini devaluations of the colon when we where
able to pretty much plan for the future.
The irony of the whole thing is the USD has
been the recent currency of choice all over
the world and has been appreciating on
global markets almost daily. But not in
Costa Rica.
Asking Costa Rica to take common sense to
the next level is asking a lot as witnessed
by the 2 year debate on the all new transit
law that is expected to be vetoed by the
President and then taken up by the next
administration in May 2010, or the long
awaited new immigration reform law that
nobody understands and changes by the day
depending who you speak with at Immigration
including, but not limited to the director
himself.
It’s Costa Rica!
John Holtz can be contacted at:
john@mjholtz.com |
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