Costa Rica fiscal reform looks doomed to fail

Subject

Fiscal reform protests.

Significance

President Carlos Alvarado is facing his most severe test since taking office in May, with his efforts to pass a long-awaited fiscal reform sparking strikes and protests across the country. Although the government has initiated a dialogue with trade unions, sustained opposition means that the fiscal reform is likely to be watered down substantially.

Impacts

• Transport disruption will affect regional trade, compounding the transit problems caused by unrest in Nicaragua.
• The national strike’s success may encourage more such actions in future, potentially over public-sector wage increases.
• Alvarado’s weakness will increase the dominance of rival political parties in the legislature.