April 2, 2014 / 9:26 PM / 4 years ago

Costa Rica president says to use capital controls very selectively

PANAMA CITY, April 2 (Reuters) - Newly approved capital controls in Costa Rica aimed at curbing speculative money flows from abroad will only be applied very selectively, President Laura Chinchilla said on Wednesday.

The new controls, approved by Congress last week, give the central bank the power to require special deposits for what it determines are speculative flows, and the ability to apply measures such as a hike in taxes on foreign remittances.

“It is an instrument that aims to enable the central bank, when fundamentally short-term speculative flows are detected, to establish some control mechanisms,” Chinchilla told reporters at an economic summit in Panama.

“Costa Rica’s economy is pretty open and invites investors in, so it is an instrument that will be used very carefully and very selectively,” she added.

Costa Rica had battled unwanted currency appreciation in recent years as global investors flooded into emerging markets.

But the colon has slumped about 8 percent this year and the central bank said last week it does not plan to use the new capital controls anytime soon. (Reporting by Christine Murray; Editing by Simon Gardner and Lisa Shumaker)

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