Costa Rica protests to hinder Alvarado’s reforms

Significance

The demonstrations form part of a broader backlash against the government’s newly introduced value-added tax (VAT) and indicate the depth of popular feeling building against President Carlos Alvarado.

Impacts

• The risk of watering down the new VAT regime will raise concerns among investors about the government’s commitment to fiscal rigour.
• Delaying VAT implementation would also force the government to cut social spending in order to hit its fiscal deficit goals.
• The evangelical movement will demonstrate its strength in further protests throughout Alvarado’s term.