Rodrigo Chaves vs. Jose Maria Figueres

Outsider Chaves becomes Costa Rica’s new president in a tight election with record abstentionism

After a heated campaign between Rodrigo Chaves, former treasury minister, and Jose Maria Figueres, the former president who was favored by the establishment, Costa Ricans elected the former amid the implementation of the IMF agreement signed last year. As FrontierView forecasted in February, we expect President-elect Chaves to continue the path of fiscal consolidation started by the outgoing Alvarado Quesada administration. However, firms should prepare for sophisticated government engagement to navigate the looming tax reform and fiscal constraints. Political fragmentation and Chaves’s populist style will certainly pose hurdles for B2G relations during the next four years in Costa Rica.


The electoral process that started in February with an atomized first round and more than 25 candidates running for the presidency is now over. In a tight election, the new president-elect obtained only 109,000 more votes than his opponent, according to the latest official data. The 43.23% voter abstentionism, which was even higher than in the first-round election, is an alarming number that has been on the rise in recent decades and evidences the increasing apathy of Costa Ricans toward democratic institutions. 

The new ruling party, Partido Progreso Social Democratico, which is only four years old and will have legislative representation for the first time, will have to tackle a myriad of complex issues. In recent years, Costa Rica has struggled with a 15% unemployment rate, a tourism sector severely hit by the pandemic, and rising debt levels, which skyrocketed from around 29.5% of GDP in 2011 to 71.2% in 2021. Moreover, its public finances are currently dependent on the US$ 1.8 billion IMF deal that the Quesada administration signed. Chaves, who was briefly the minister of treasury for the outgoing president, promises good relations with the IMF while fostering growth through foreign direct investment, state modernization, and prioritizing business entrepreneurship. In his inaugural address, he underscored transparency and austerity as pillars of his upcoming administration.

Our View

Costa Rica will have a pro-market president in the 2022–2026 period—a positive sign in a subregion facing significant economic and governance challenges. However, the country’s future remains uncertain. The economic imbalances are structural and will not be easy to solve, particularly within the current political landscape, where Chaves’s party will represent only 10 out of the 57 members of the unicameral legislative assembly. Moreover, his confrontational style and continuous attacks on traditional parties, important segments of the private sector, and the media will make centrist and sustainable political arrangements harder. Not surprisingly, Chaves has suggested he will use referendums to advance his administration’s policy agenda. While this strategy could be effective in the short term, it might exacerbate the country’s polarization and thus further erode Costa Ricans’ already-waning confidence in the political system.

President-elect Chaves will hold elective office for the first time in his career; however, his technical qualifications as an economist alongside his 27-year career at the World Bank, where he rose to be the director for Indonesia, might be helpful to address the dire economic situation the Central American nation is going through. Moreover, the fact that Costa Rica achieved a 0.1% primary fiscal surplus in January, the best result in 14 years, and an overperformance regarding IMF targets set in 2021, are evidence that the country is reorganizing its public finances. Chaves is likely to follow this path, as Costa Rica has no leeway to drift away from the IMF agreement.

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