Caribbean & Central America - August 2008 (ISSN 1741-4458)

An opinion poll published on 4 August showed a sharp decline in support for Costa Rica's President, Oscar Arias between April and July, from 44.2% to 27.5%. As well as reflecting the impact of the recent ministerial corruption scandal [RC-08-07] which eventually resulted in the resignation of housing minister Fernando Zumbado in early August, Arias' dwindling popularity also owes in part to the government's perceived failure to combat inflation and soaring living costs.

Confidence in the centrist, US-allied Arias government which is half way through its current term has suffered this year. Although the government narrowly managed to secure a crucial public referendum on Costa Rica's adhesion to Cafta-DR, the trade treaty between Central America and the US in October last year [RC-07-10], opinion polls taken since then have shown a decline in support for the Arias administration. This has owed to concerns over rising levels of organised crime, inflation and lingering public scepticism (fuelled by the political opposition) about the impact of the Cafta-DR locally.

The sense at the moment is of a government caught in a mid-term slump, having initially focused all of its energies on securing approval of Cafta-DR. Amid an economic slowdown (official projections are for real GDP growth of 3.3% this year, down from a strong 7.3% in 2007), the opposition has accused the government of only a belated reaction to key issues, particularly rising inflation, which the IMF now expects to average 14% annually this year, up from 9.0% last year. The government has followed others in the region by offering new agricultural subsidies and fiscal incentives to boost domestic food production as well as more recently seeking to reduce its fuel import bill via membership of the Venezuelan oil initiative Petrocaribe in July [RC-08-07]. However, such measures have been 'too little, too late' for much of the electorate.

A recent poll, taken by Demoscopia between 19 and 27 July for local daily, Al Dí­a, shows that Arias has some way to go to rebuilding public trust; in April 36.7% of respondents had “a lot of confidence" in him, while in July only 25.4% felt that way. In April, 19.6% said they had “no confidence" in the government, while by July this figure had risen to 26.8%. Respondents' main criticisms of Arias included his failure to fulfill his campaign promises (50.4%); failure of his “message" to convince (49%); failure to inspire enthusiasm (44.8%); and lack of guidance or leadership (40.7%).

• Cafta legislation edges forward

On 1 July the legislature approved (by 31-12) a new Regulatory Law for the Insurance Market, opening up the state insurance monopoly to private competition. The state-owned national insurance institute will retain its control over some areas, such as car insurance. Costa Rica's insurance market is expected to grow considerably once the state monopoly is dismantled. Premiums should fall as more providers enter the market. The government will also be required to set up a regulatory body for the sector ahead of liberalisation.