July 1, 2001
Costa Rica's banking system, like many other industries in the country, is largely controlled by the state. The two largest banks, which are state-owned, command 68% of the banking assets in the country. Until recently, the government also was the sole manager of the country's pension fund assets. The recent liberalization of the pension system is making capital available to the local markets and the government hopes the changes will ease the growing burden on its pay-as-you-go system.
"We saw problems developing on the horizon," says Oliver Castro, head of Costa Rica's pension fund superintendency. "Our analyses showed that by 2020 we would start facing serious problems due mostly to
Costa Rica is hoping that a liberalized pension fund system will ease the government's growing social security burden while revitalizing the local capital markets.