By Michael D McDonald
An evangelical lawmaker and a candidate from Costa Rica’s ruling party look set to face each other in a runoff vote to choose the country’s next president, following a first round in which same-sex marriage supplanted the economy as the most potent issue.
Fabricio Alvarado, who argued against any change to the marriage laws, was ahead with 24.8 percent after 89 percent of polling stations had reported, according to the electoral authority. Ruling party candidate Carlos Alvarado, who is no relation, trailed in second place with 21.8 percent of the votes. Since none of the candidates exceeded the minimum threshold of 40 percent to avoid a second round, a runoff vote will take place on April 1.
Support for Fabricio Alvarado, a previously little-known lawmaker, rocketed after the government said it would implement a ruling by the Inter-American Court of Human Rights in favor of gay marriage. The surge in his poll numbers triggered the biggest one-day drop in bonds for 14 months as the focus of the debate shifted away from Costa Rica’s surging budget deficit.
“The main issue to be dealt with is the fiscal deficit,” said Vidal Villalobos, head of economic studies for Prival Bank S.A., speaking before the election. “Markets are very aware of Costa Rica’s fiscal problems and the country is paying for it.”
Investor favorite Antonio Alvarez, who campaigned on limiting fiscal borrowing, was in third place with 18.7 percent.
Investors are jittery after the fiscal deficit widened to 6.2 percent of gross domestic product last year, the highest since 1983 when the central bank began tracking it. President Luis Guillermo Solis has repeatedly failed to get new taxes through congress.
The Central American nation has suffered a total of five downgrades to its credit rating from Moody’s, Fitch and S&P Global Ratings since 2013. Moody’s had lifted the nation to investment grade, but all three agencies now rate Costa Rica’s bonds as junk.
The central bank said in a report on Thursday that the fiscal deficit will widen further to 7.1 percent of gross domestic product this year and 7.9 percent next year. Debt levels will also rise to a record 53.6 percent of GDP this year and 59 percent next, the bank said.
Credit: Bloomberg Politics, www.bloomberg.com