Costa Rica Voters Set to Punish Rulers Over IMF-Backed Austerity

Voters look set to punish the ruling party in today’s presidential election over austerity and new taxes imposed under an IMF deal, fatigue with Covid-19 restrictions, and a weak economy

Costa Rica elections.
By Michael McDonald
February 06, 2022 | 09:22 AM

Bloomberg — Voters in Costa Rica look set to punish the ruling party in Sunday’s presidential election over austerity and new taxes imposed under an International Monetary Fund deal, fatigue with Covid-19 restrictions and a weak economy.

A record 25 candidates are on the ballot, including school teachers, doctors, lawyers, a farmer and an evangelical singer. Polls show the candidate from the ruling PAC party, which has been in power for 8 years, with 1% support.

Former President Jose Maria Figueres is leading with the backing of 17% of potential voters, promising to reignite the economy with a wave of foreign investment.

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Former Vice President Lineth Saborio is in second place with 13% support, pledging to lower gas prices, while evangelical singer and 2018 runner-up Fabricio Alvarado, who said he would eliminate 50 taxes, is polling third at around 10%. A pro-Cuban socialist candidate feared by investors, Jose Maria Villalta, is polling fifth. A third of potential voters said they were undecided.

Polls are open from 6 a.m. to 6 p.m. with initial results expected Sunday night. About 3.5 million people are registered to vote, and a runoff will be held on April 3 if no candidate wins more than 40%.

Voters angered by poverty and high unemployment caused by pandemic curbs overthrew the ruling party in Honduras and the ruling coalition in Chile at the end of 2021, and polls show opposition candidates leading ahead of elections in Colombia and Brazil this year. Costa Rican President Carlos Alvarado’s approval rating sank to 12% in November following almost 2 years of Covid-related curfews, restrictions on business activity and driving.

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Under Investigation

Alvarado is under investigation for illegally gathering data on citizens and some of his advisers were named in an infrastructure bribery case. He’s denied wrongdoing and, in any case, Costa Rica’s election rules prevent him from seeking another term.

“It’s a weak administration and President Carlos Alvarado is very unpopular,” said Eurasia Group Analyst Risa Grais-Targow. “He’s had his own scandals to contend with not to mention the pandemic and doing a fiscal adjustment.”

The economy of the Central American nation will grow 3.5% this year, slower than Panama, the Dominican Republic and Jamaica, though faster than El Salvador, according to analysts surveyed by Bloomberg. Unemployment remains above pre-pandemic levels, at 13.7%.

Alvarado’s government passed a 13% value-added tax in 2018 and in January 2021 inked a three-year, $1.8 billion extended-fund facility with the International Monetary Fund to help narrow a fiscal deficit. His administration has so far failed to pass any of the reforms proposed under the IMF program, including a public wage bill that would slow government salary growth and a bill that would raise property taxes on homes valued over $210,000.

Voters will also elect new members of the country’s 57-member, unicameral legislative assembly on Sunday. Polls suggest as many as 10 different political parties could make up the new legislature.

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