QCOSTARICA — Legislator Jorge Dengo Rosabal from the Partido Liberal Progresista (PLP) introduced a bill to the current legislature proposing that Costa Rica adopt the U.S. dollar as its national currency. This is one of the final initiatives that the legislator put forth before stepping down from his position on May 1.
“This marks the beginning of a legislative discussion that is considered crucial in today’s context. The topic of debate for many years has been the appropriate exchange rate between the Colób and the US dollar, which is the primary foreign currency used in various transactions within the country, the legislator clarified in a recent statement to the press.
Dengo highlighted that the public has not been fully informed about the criteria used by the Board of Directors of the Central Bank of Costa Rica (BCCR) to determine monetary policy and establish the exchange rate, as these have been kept confidential.
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His bill, Expediente 24,296, outlines various reforms for the adoption of the new currency, including the process for determining the exchange rate for citizens to convert colones to dollars.
The methodology involves calculating the average value of the daily reference purchase and sale exchange rates provided by the Central Bank from February 2, 2015, to April 29, 2024, which is set at ¢576.62 colones per dollar and would remain fixed and unalterable.
The bill reforms article 42 of the Ley Orgánica del Banco Central to specify that the official currency of the country will be the United States dollar. Additionally, Article 43 is revised to state that the dollar will be the legal tender in the country, and all transactions, financial operations and accounting records must be expressed in dollars.
As a transitional measure, if approved, once the law, comes into effect the official currency in Costa Rica will be the United States dollar. However, Colones banknotes and coins in circulation may also be considered legal tender for a period of 12 months from the implementation of the law.
Additionally, financial institutions within the national banking system must exchange these colones for dollars at no cost when they are presented for any transaction, and the exchange will be conducted at the established fixed conversion exchange rate.
The Central Bank will continue to be the official provider of dollars to the national banking system.
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On the other hand, it is established that the Central Bank of Costa Rica will provide the dollars to the banks of the System through the respective exchange with no fees or charges for bank users.
The bill also requires the Central Bank to exchange the current colones in circulation for dollars, with the collected colones being removed from circulation and disposed of at the discretion of the bank.
At last, the bill stipulates that for the initial 12 months following the enactment of the law, prices of goods and services must be shown in both US dollars and Costa Rican colones, with the colones amount calculated based on the established fixed exchange rate.
The legislative process in Costa Rica can be lengthy. A bill, if accepted by the legislative body will have to go through a series of committees before making it to the legislative floor for first and second debate and approval by a majority of the 57 legislators. The approved bill will then be sent to the Presidency for the president’s signature and publication in the official gazette, La Gaceta.
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Last month, Dengo announced that he would be resigning from his position on May 1, which coincides with the halfway point of the current legislative term, citing health concerns within the family as the rationale for vacating the legislative seat to Cynthia Córdoba.
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