Why Costa Rica is Considered a “Bimonetary” Economy and Its Myths ⋆ The Costa Rica News

Costa Rica is a small and open economy. Consumers buy most goods and services in colones. However, despite the country not being dollarized, there are some goods and services that are mostly offered in dollars.

For example: vehicles, properties (sales and rentals), and certain services such as tourism. Even, there are companies that pay their salaries in dollars. Banks offer loans in dollars, not forgetting that the government and public institutions also conduct transactions in dollars.

So, it could be said that Costa Rica is a bimonetary economy, with the dollar being the second most important currency. That’s why there are some myths about the dollar. Some of them are:

Myth 1:

Prices in dollars are lower. Sometimes people see a price difference because the dollar amounts have few digits. This is corrected by converting the figure to colones.

Myth 2:

Online purchases with prices in dollars do not pay the VAT tax. The reality is that all products and services consumed in the country (whether purchased in dollars or colones, online or not) are subject to tax payment, except for those exempted like the basic food items.

 Myth 3:

If the dollar goes down, you have to go into debt in dollars. In the best-case scenario, if you earn in dollars, you can take advantage of the facilities with loans in that currency; but if you earn in colones, since the exchange rate is variable, you will face the risk of exchange rate fluctuations.

Myth 4:

Is it better to earn in dollars or is it better in colones? It will always depend on which currency the person uses to carry out their transactions (and in what percentage). This way, you can avoid (or not) exchange rate risks.

Myth 5:

If the dollar rises, you should invest in dollars. The value of the exchange rate varies in the short and long term, therefore, it is not advisable to focus on its daily movements to make an investment decision. In this case, other aspects such as the interest rate relationship and what will happen with the exchange rate must be considered.

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