Costa Rica - Economic report (Vol. 1 of 2) : Main report

Report No. 360-CR Economic Report of Costa Rica (In Two Volumes) Volume I The Main Report March 15, 1974 Latin America and the Caribbean Regional Office Not for Public Use Docrument of the International Bank for Reconstruction and Development International Development Association Thi, report was prepared tor official use oniy by the Bank Group. It may not he published, quoited or cited without Bank Group authorization The Bank Group does not ac tept responsibilty tor the aicuracy or uompleteness of the report. FIllE COPY  EQUIVALENTS AND SYMBOLS Currency Official Exchange Rate: Free Exchange Rate: US$1.00 - 6.68 Colones (0) US$1.00 - 08.60 01.00 - $o.11497 ,01.00 - $0.1163 ,01,000 - $149.7 01,000 - $116.3 01,000,000 - $149,700 1, 000,000 - $116,300 Measures and Weights 1 square kilometer - 100 hectares * 247 acres 1 manzana - 0.699 hectares - 1.727 acres 1 metric ton - 2,204.6 pounds - 21.74 quintals 1 short ton - 2,000 pounds - 0.907 metric tons - 19.72 quintals 1 quintal (C.A.) - 46 kilograms - 101.5 pounds 1 coffee bag (regular) - 60 kilograms - 1.3 quintals 1 banana box - 42 pounds - 19.05 kilograms  CLOSSARY OF ABBREVIATIONS ADP Agricultural Development Plan AID U.S. Agency for International Development ANDE National Teachers Association BACR Anglo-Costa Rican Bank BANDECO Banana Growers Association BCAC Bank of Agricultural Credit of Cartago BCR Bank of Costa Rica BNCR National Bank of Costa Rica BPDC Community Development Bank CABET Central American Bank for Economic Integration CACM Central American Market CAN National Agricultural Council CCSS Costa Rican Social Security Fund CEMPRO Center for the Promotion of Investment and Exports CNP National Production Council COFISA Industrial Finance Corporation FAO Food and Agriculture Organization IAMS Medical Assistance Institutes ICE Costa Rican Power Institute ICO International Coffee Organization ICT Costa Rican Tourist Institute IDB Inter-American Development Bank ILO International Labor Organization ILPES Latin American Economic and Social Planning Institute IMAS Social Assistance Institute INA National Apprenticeship Institute INCOP Pacific Port Authority TNS National Insurance Institute INVU National Housing and Urban Institute JAPDFVA Atlantic Development and Port Authority TIOPT Ministry of Public Works and Transport MF. Ministry of Education MH Ministry of Health MlAC Ministry of Agriculture OFIPTLAN Ministry of Planning SIECA Secretariat for Economic Integration in Central America SNAA National Water and Sewerage Service SNE National Electricity Service UCE University of Costa Rica GOVERNMENT OF COSTA RICA FISCAL YEAR January 1 to December 1   This report is based on the findings of an economic mission to Costa Rica in March - April 1973 composed of: Elkyn Chaparro (Chief) Jose Datas-Panero (Public Investment Analysis) Kurt Carnemark (Transport Analysis) Michele Guerard (IMF Fiscal Consultant) In December 1973 Messrs. Gerald Flood and Elkyn Chaparro discussed the conclusions of the report with the Costa Rican authorities.   COSTA RICA TABLE OF CONTENTS Page No. COITNTRY DATA MAP SUnIMARY ANT) CONCLUSIONS . ............ r *,** * * *** i-vii I. MAJOR CHbARACTERISTICS OF GROWTHI PATTERN 1 II. POPLTATION, EMPLOYMENTI AND INCOME DISTRIBUTION 6 A. Overall Trends in Population and Economically Active Population ..... 6 B. Employment and Unemployment .......... 7 C. Income Distribution ............. 9 III. ECONOMIC SECTORS .. ..... ......... . ....... 13 A. Agriculture ........ .......... 13 B. Industry ............................ 21 C. Tourism ,...................., 31 IV. PUBLTIC INVESTMENT AND INFRASTRUCTURE ........... 32- A. Past Developments and Issues .e...... 32 B. Preliminary Investment Program 1973-77 ,,,,,,.............,,, .,,.32 C. Sectoral Issues ,................. 36 V. FINANCING GROIWTH: (1) CREDIT AND BANKING ...... 45 A. Past Development and Policies ........ 45 B. Short-Term Issues ... 49 C. Long-Term Issues ................... . 49 VI. FINANCING GROWTH: (2) PUBLIC FINANCE .......... 53 A. An Overview .. . ..e........... 53 B. The Tax System ....................... 55 C. Expenditure Trends and Policies ...... 69 D. Financing of Public Investment ....... 73 VII. BALANCE-OF-PAYMENTS POLICIES AND PROSPECTS ..... 76 A. Past Development and Policies ........ 76 B. Future Prospects ..................... 85 VOLUME II STATISTICAL, APPENDIX   Page 1 of 2 pages COuNTRY DATA - CGSTA RICA DENSITY A bA 2 9 ~~~~~~oPLULATION k fm _b2-.. ASIA) kmrn0_/ 0_XT o- (mid 1973) ..per o Rate of Growth: 3.3 (fron 1960 to 1970) 2.8 (1970) POPUATION CHARACTERISTICS (19701 HEALTH (1970) Crude Birth RSate (per 1,00() 33 popslatior per physisail 102? Cude Death Rath (per 1,000) 7 opuLatio Per hospital bed 2 Infant Mortality (per 1,000 lice larthS) 60 rR6a5I.n-Se,wet guntotat 51. DIS d IBUTION 0 'lLAND OWNERO..P INZZIAE DISTRIBUTION (1S9,12 . S 4~~~~~~~~~~~~~~ ,owned by top 10 f fnermerse. oigtow t qoitle 5o.6 % owned hy ontallent 10 5 former. ACCESS TI PIPEDI WOT'RR (1970 0 plloE olaTO n I -I 117R (197010 ACCESS TO ELECCTEICITY 1-970 5 1 of populdtlon - urbano100 fpoplatlon - eral 56 1'T ieo8o cornnoEDUGATION 1971) aaLlorie protkeA Intake 7pofrequiremert Adult Literancyrate % d4 P pit. prot.in intake (grao ps day) 62 ry o GIP PER CAPTIA or, 1971 : us $ 586 GEOSS NATIONAL PRODUCT IN 1972 ~~~~~~~~~~~~~ANNUAL RATE OP GROWTH UI constant t,races) GROS;S NATIONAL PRIDUCT IN 1972 AU llA 9i H 1960-65 1965-70 1971 1972 GYP at MRoket Prices 1049 100.0 4.9 7-9 5.82 lies Dom.estic In-eotnent 295 28.1 98.1 16.3 Css Notional Sacisgs 204 19.4 5-5 7.0 1.4 16.? Thercot Accunt Balance -91 -8.7 .1 13 4 42 19.i SoTpor of Giods, NFS 340 32.4 7. I.mprt6 of Goods, NFS 415 39.6 8.4 9.4 7.5 .5 .9T5UT, EMPLO0IENT AND PRODUCTIVITY (1967 data) Vaiue Added inploy nat V. A. Pee Worker US $ hln. S Hln _ _ i Agr-clt,ure 159.7 23.8 0.209 6.2 761, 51.4 Industry 166.6 24.8 O.088 8.6 2969 133i. Seeiac6 ~344.9 51.4 0.159 35.2 Total/Average 71 100.0 GOllll1ENT FINANCE Gemeral Government Central Gocernment (ColonesMln) S of GDP (Colonon HI.) 7 of GD? (C 1 Z1972 199-71 1972 1972 1969-71 Cereat Receipts 1603 20.7 19.3 1168 15.1 14.i fairest Expend-turee S1"8 18.7 17.4 1196 15.5 131.8 c.rrent Surplus 155 2.0 1.9 -28 -1.4 -0.2 Capotal Eapendite-e 4197 6.4 7.8 400 5.2 ).5 Externa' Assistance (met) 158 2.0 1. 154 2.0 0.7 07 C-n-rrted to US $ usiog weighted -cerage exchange rate 1 US $ - 0 7.213 2' 5c-tsael distribation cf labor forcec not ovailable for 1967. .not a-ailable not applicable  Page 2 of 2 pages COUNTRY DATA - OUSTA RICA MONEY, CREDIT and PRICES 1965 1969 1970 1971 1972 7 Million colenes outstanding end of period) Money and Quasi Money 847 13j4 1396 2001 2382 Bank credit to Public Sectos 106 150 75 149 251 Bank Credit to Private Sector 1170 1427 1657 2112 2366 (percentages or Index Number.) Mooty and Quasi Money a% S of GDP 21.4 23.9 22.3 28.8 30.8 Wholesale Price Index (1966 = 100) .. 113.0 120.3 128.0 134.9 Ainual percentage changes in: Wholesale Price Index 4.2 6.5 6.4 5.4 Bank credit ti Public Sector -29.6 -50.0 98.7 68.5 Back eredit to Private Se-tor 7.5 16.1 27.5 12.0 RALANCE OF PAYMENTS 1970 1971 1972 MERCHANDISE EXPORTS (AVERAGE 1970-72) (MifTFn U $) Eparts of Goods, NFS 287.7 284.1 339.5 Imp-rts of Goods, NFS 350.3 389.2 415.1 US $ IMil % Resource Gap (deficit = -) 6 -l05.1 -75.6 Coffee 70 26.6 BRanana 72 29.4 Reef 22 9.0 Ioterost Payments (net) -11.5 -11.9 -14.5 Sugar 11 4.5 Workern' Remittances ... ... ... Pharmaceutioals 6 2.5 OLher Factor Payments (net) - 3.8 - 1.2 -10.4 All otthr Commsodities 64 26.1 Net Tra-nofrs 5.9 6.7 8.1 Total 5 100.1 Balance on Current Account 74.0 -11l0.9 -91.4 EXTERNAL DEBT,* DECFIXPER 31. 1972 Direct Foreign Investment 26.3 22.0 22.0 lE US $ Min Net MLIT Borroaing 10.0 10.4 12.9 Public Debt, incl. guaranteed 275.0 Disbursements 30.6 30.5 36.6 Non-Guaranteed Private Debt Amortination 20.6 20.1 23.7 Total Outstanding A Disbursed 275.0 Subtotal 36.3 32.4 34.9 DEBT SERVICE RATIO FOR 1972 Capital Grants . . . Public Debt, incl. guaranteed 10.0 Other Capital (cot) 27.4 90.3 62.fi Non-Guaranteed Private Debt Other items n.e.i. - 1.4 - 0.3 1.5 Total Outstanding & Disbursed 10.0 Iscrease in Reserves (a) - 11.7 11.5 4.0 Iros3 Reserves (end Year) 21.7 i3.0 59.5 IBRD/IDA LENDING (as of October 31, 1973) Net Reserves (end Year) 26.0 37.5 51.5 (Million Ui $) 3/ IBRD IDA RATE OF EXCHANGE Outstanding & Dtibursed 7 52W Undinu...end 34.7 Official exchange rate Outstanding incl. Undisbursed I ,. 5 ,Z 1.00 =