Costa Ricans will go to the polls in early April to elect a new president in one of the strangest elections in the country’s history.
Voters will cast ballots in a runoff between Guillermo Solis, of the Citizens Action Party (PAC), and Johnny Araya, of the ruling National Liberation Party. What makes the race odd is Araya’s decision to stop campaigning because he was far back in the polls. The constitution prohibits him from quitting, but he stopped being a candidate in February.
Solis is a political neophyte and will be the first president representing the PAC. He will also be Costa Rica’s first left wing president. He will not have an easy job.
Gustavo Araya, a political scientist and director of the Citizen Institute, a Costa Rica think-tank, said Solis faced political, socio-economic and state administration challenges that would force his future government to work quickly. He said Solis had made a number of campaign promises that he had to keep if he wanted to rebuild confidence in the state.
“Solis will have to find a balance that allows him to address the debt while maintaining the state’s social commitment to education, health and infrastructure. This will have to be done without raising taxes,” said Araya.
The public debt is equivalent to 36% of GDP. This is up from 30% at the end of 2011.
Araya said Solis made the “no new tax” pledge during the campaign and would have to stick to it. He said raising taxes or slashing spending would lead to a quick erosion in the government’s credibility, which had already suffered because of allegations of corruption against current administration of President Laura Chinchilla. Chinchilla finishes her four-year term on May 8.
Joydeep Mukherji, Latin America managing director for Standard & Poor’s, said Solis would not be able to maintain spending unless something was done to generate more revenue. “Costa Rica’s debt to GDP ratio continues to grow. This is even more troubling because unlike other countries a significant portion of its debt is in US dollars,” he said.
Mukherji said Solis’ PAC was not necessarily opposed to tax reform. He said the party, while in the opposition, voted for tax reform packages proposed by the previous two administrations. “The PAC might be taking over the presidency for the first time, but its lawmakers are aware of what needs to be done,” he said.
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