Opposition candidate Luis Guillermo Solís has won Costa Rica’s presidential election by a huge margin, with the ruling party candidate conceding defeat well before all the votes counted.
A former diplomat and professor, Solis reportedly won more than 77% of votes in the run-off held on Sunday while the ruling party candidate Johnny Araya won 22.1% of the ballots.
According to local newspapers, graft allegations against the ruling party helped Solis win most of the votes, but the president-elect now faces the daunting task of strengthening the country’s currency and cutting the rise in public debt. A Reuters report says Solis wants to see the national currency trade in a narrower band to avoid volatility. Costa Rica’s colon is down 9% this year, after firming in December.
Analysts say the currency was hit hard as global investors pulled out of risky assets (stocks) after the US Federal Reserve started unwinding its massive monitory stimulus program. The colon slumped nearly 9% at the start of March to its weakest level in four years, according to Reuters data, then whipped back nearly 3% by the end of the month.
Solis, who takes office on May 8, is talking of focusing his attention on stabilizing the currency and widening tax net. The president-elect has, however, made it clear that he would not raise taxes in the first two years of his term.
During the campaign trail, he said he would increase spending on education and other infrastructure projects. Analysts say Solis might find it tough to raise taxes to push down the rising fiscal deficit, which currently stands at 6% of the GDP.
According to the country’s central bank, Costa Rica’s economy grew by 3.5% in 2013. Lack of administrative experience and fewer party members on the national assembly might hinder Solis’ attempt to amend laws to put the country on growth path, analysts say.