Scandals, inequality loom large as Costa Rica votes for leader

by Reuters
Monday, 3 February 2014 00:54 GMT

By Alexandra Alper and Zach Dyer SAN JOSE, Feb 2 (Reuters) - The front-runner from the centrist ruling party in Costa Rica's Sunday presidential election tried to fend off a surge by his leftist rival fueled by public anger over corruption scandals and rising inequality. However, given a crowded field, the vote was widely expected to head to an April run-off. Governing National Liberation Party hopeful Johnny Araya led polls on his promise to reduce poverty, and sought to distance himself from President Laura Chinchilla's scandal-plagued government while painting rivals as radicals. Araya on Sunday proclaimed his candidacy "the safest, most responsible option" for Central America's second-largest economy. But voter anger over government corruption has buoyed a challenge from left-wing lawmaker Jose Maria Villalta, who also promised to tackle inequality in the coffee-producing nation. If none of the 13 candidates wins more than 40 percent of votes, there will be a run-off between the top two candidates for only the second time in Costa Rican history. "The country needs major surgery," said cab driver Gerardo Alfaro, 53, who said he backed the leftist hopeful. "Villalta is new. He doesn't know how to steal yet," he added before polling stations closed. But others described Araya as the more moderate option. "There are two extremes, the extreme right... and communism. We favor the center and that's the best option for Costa Rica," said David Perez, 21, who works for a family business. The eventual winner will have to tackle growing government debt that totals more than half of gross domestic product, as generous salaries and mandatory education spending weigh on a weak tax take. "If they don't do something, then this somewhat negative trend on the debt could continue and that could have an impact on the credit rating," said Joydeep Mukherji, a sovereign credit analyst with Standard & Poor's, which rates Costa Rica at BB with a stable outlook. Villalta told Reuters on Saturday he would seek to address the problem by combating waste, tax evasion, and lightening a heavy burden on the middle class if he wins. "What we want is a progressive reform with greater tax fairness where those who have more pay more," he said. A lawyer by training, Villalta, 36, cut his teeth organizing against the Central American Free Trade Agreement. He is the only member of his Broad Front party, formed in 2004, to serve in Congress during the 2010-2014 term. But he proposed more than 100 bills, including one to strip high-level officials of immunity while in office. That resonated with voters, after Chinchilla sparked outrage by accepting flights on a private jet, despite laws barring public officials from accepting sizeable gifts. National Liberation Party front-runner Araya, 56, has vowed to tackle the deficit by limiting public sector bonuses, creating a capital gains tax and shifting to a value-added tax. Gaffes, such as underestimating the price of milk in an interview, have distanced Araya from equality-conscious voters, while the national prosecutor's probe of allegations of abuse of authority and embezzlement while mayor of San Jose have also dampened his appeal.

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