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Costa Rica Country Report

Country Risk Level

Medium

Overview

Executive Summary

President Carlos Alvarado's primary policy focus is reducing the fiscal deficit, which reached 6.9% of GDP in 2019 despite the implementation of a new fiscal package. To finance COVID-19-virus-related spending, the government has obtained multilateral financing, including a USD508-million loan from the International Monetary Fund (IMF). In order to reduce its fiscal deficit, the government is likely to start negotiations for an Extended Fund Facility (EFF) with the IMF for USD1.75 billion in October. The government plan includes a series of new taxes, including a temporary tax on banking transactions and a 6% increase of the corporate tax rate for companies above a certain threshold. However, Alvarado will likely face significant challenges to approve any plan negotiated with the IMF as he does not hold a majority in Congress. Costa Rica reopened its borders for tourism on 1 August, allowing tourists from low-risk jurisdictions such as Canada, the European Union, and the UK. In September, the government authorised US citizens to enter the country, but only from 20 designated states. Labour strikes are likely to increase significantly once the pandemic abates as a result of the expected negative economic impact of the COVID-19-virus outbreak. Planned public-sector pay caps, reduced public spending, and private-sector job losses caused by the economic effects of the pandemic, significantly raise the likelihood of prolonged protests and strikes by those demanding wage increases, job security, or opposing budget cuts. The government’s negotiations with the IMF and the likely implementation of unpopular austerity measures will further increase protests risks in Costa Rica in the next 12 months.GDP growth is expected to contract in 2020 by 3.8% from 2.1% growth in 2019 as the pandemic is expected to bring down private consumption, tourism, exports, and investment. For 2021, the economy is expected to recover and grow at around 3% of GDP.

Operational Outlook

There are no major operational risks to foreign investors in Costa Rica. Labour unrest risks are likely to increase in the 12-month outlook because of job losses and further austerity measures. However, such demonstrations are not likely to undermine Costa Rica’s propitious investment climate. Skilled labour is readily available and the level of unionisation in the private sector is relatively low. Environmental awareness is high and development projects are closely monitored by international and national organisations. Improving infrastructure, particularly highways, is currently a focus for the government amid repeated reports of degradation, but a number of major projects have faced delays.

Terrorism

Low

There are no known terrorist groups in Costa Rica with the intention or capability to target private, military, or government-owned assets. However, explosives were used in mid-2019 against government buildings, which is unusual in the country. There is a modest but growing presence of international drug-trafficking organisations that do not have an interest in conducting terrorist attacks, although their presence is contributing to high violent crime rates. Dissidents of the demobilised Revolutionary Armed Forces of Colombia (Fuerzas Armadas Revolucionarias de Colombia: FARC) are unlikely to present a direct crime or terrorism risk.

Crime

Crime rates in Costa Rica are lower than those in other neighbouring countries but rose steadily from 2012 to 2017, with the homicide rate reaching historic levels of 12.1 per 100,000 residents in 2017. However, there has been a gradual improvement under the administration of President Carlos Alvarado. In 2018, the rate decreased to 11.7 and in 2019 to 11 per 100,000 residents The main crime risks for foreigners include armed robberies, drug-related incidents, and assaults. Car theft has become a growing problem because of growth in the stolen-car market in neighbouring countries. Theft of cargo incidents are mainly concentrated in Limón province but have slightly decreased over the past year.

War Risks

Costa Rica abolished its military in 1948, but remains protected by an active national security force and through international co-operation with the United States. The risk of interstate war remains low despite an ongoing border dispute with Nicaragua along the San Juan River. Occasional incursions into contested areas are likely as both countries pursue infrastructure projects along the San Juan River and Nicaragua seeks to expand offshore oil exploration. Major disputes between Nicaragua and Costa Rica will probably manifest themselves through diplomatic channels.

Social Stability

High

Public unions stage regular protests over planned public spending cuts, fiscal reforms, and environmental concerns. However, demonstrations are generally peaceful and are not large enough to threaten the government’s stability. Protests are also sporadically close to the Limón port and block motorway access to the capital. Protest locations are likely to include motorways and border crossings, such as route 27 between San José, Santa Ana, Route 32, the Panama crossing at Paso Canoas, and government buildings in San José. Occasional trucker protests can delay traffic on main roads and at border crossings. Protests are likely to re-emerge once the COVID-19-virus pandemic abates because of job losses and further austerity measures.

Health Risk

Vaccinations required to enter the country

Proof of vaccination against yellow fever is required for travelers over nine months of age arriving from a country with risk of yellow fever (YFV) transmission (with the exception of Argentina, Panama, and Trinidad and Tobago ) and for travelers who have been in transit for >12 hours in an airport located in a country with risk of YFV transmission.

Routine Vaccinations

Hepatitis A: A vaccine is available for anyone over one year of age. The vaccine may not be effective for certain people, e.g. those born before 1945 and who lived as a child in a developing country and/or have a past history of jaundice (icterus). These people can instead get a shot of immune globulin (IG) to boost their immunity against the disease.

Hepatitis B: A vaccine is available for children at least two months old.

Diphtheria-Tetanus-Polio: A booster shot should be administered if necessary (once every ten years).

Yellow Fever: A vaccine is available for children over the age of one year.

Other Vaccinations

Typhoid Fever: If your travels take you to regions with poor sanitary conditions (for children two years old and up).

Malaria: Recommended preventive medication - chloroquine (sometimes marketed as Nivaquine).

For Children: All standard childhood immunizations should be up-to-date. In the case of a long stay, the BCG vaccine is recommended for children over one month and the MMR (measles-mumps-rubella) vaccine for children over nine months.

Natural Risks

Costa Rica is vulnerable to natural disasters, including seismic activity. The risk is highest on the Nicoya Peninsula (north) and the Osa Peninsula (south).

Eruptions of the Turrialba Volcano, located approximately 35 km (25 mi) east-northeast of San José, are relatively common and can lead to flight disruptions at San José's Juan Santamaria (SJO) and Tobías Bolaños (SYQ) international airports, including full airport closures. The volcano also regularly drops potentially hazardous ash over the Central Valley, home to 60 percent of Costa Rica's 4.3 million residents as well as on San José (see HEALTH section). Various other active volcanoes are present in Costa Rica, including Irazú, Rincon, and Poás.

In the event of nearby volcanic activity, keep abreast of the situation and take the necessary precautions if in affected areas, such as stocking up on drinking water, wearing respiratory masks, and wearing covering clothing to protect skin from abrasive ash. Be prepared to evacuate if such an order is given.

Thunderstorms and downpours are common during the rainy season, which lasts from May through November with a peak of precipitation in September and October. Flooding and landslides, and consequent travel disruptions, are possible during this period.

Transportation

Roads are often in mediocre condition; motorists should drive with caution, particularly on secondary roads and in rural areas. Poor road conditions and reckless local driving habits contribute to high fatality rates on the road. Additionally, roads are often closed due to flooding and landslides during the rainy season (May to November). Avoid driving at night when possible, particularly outside of cities.

Traffic congestion is notorious in the capital region (Gran Área Metropolitana), e.g. the cities of San José, Heredia, Alajuela, and Cartago, particularly on San José's Circunvalacion ring road. Traffic conditions are particularly poor in the event of protests or car accidents (common in the city) and on rainy days, especially in the event of flooding.

While the ride-sharing application is technically illegal in Costa Rica, the service continues to function. Regarding taxis, it is advisable to only use licensed taxis with working meters. City buses are generally safe, inexpensive, and well maintained; be vigilant, however, regarding pickpockets.

Criminals have been known to specifically target rental cars, sometimes puncturing tires and following the car until it is forced to pull over then robbing the occupants.

Air travel is safe in Costa Rica. However, flight disruptions are relatively common in the afternoon due to the frequency of rain and thunderstorms.

Practical Information

Climate

Conditions are wet and tropical along the Caribbean coast but drier inland and along the Pacific. The dry season lasts from January until May and the rainy season from April until December. Rainfall is the heaviest along the Atlantic and Pacific coasts (intense but brief showers). Costa Rica's Central Valley has a temperate climate throughout the year. Temperatures are very high along the Pacific coast in the summer and slightly cooler along the Caribbean coast (30°C).

Useful Numbers

Country Code: +506
Police: 911
Fire Dept.: 911
Ambulance: 911

Electricity

Voltage: 120 V ~ 60 Hz

Outlets:

Risk Level
Critical High Medium Low Minimal