European Union reducing aid to richer Latin countries

The European Union has decided to eliminate guaranteed aid to various Latin American countries in its 2014 – 2020 budget. Costa Rica is one of the countries.

According to the Ministerio de Relaciones Exteriores, Costa Rica, due to its relatively high level of development, was not considered a priority country for cooperation by international donors. Costa Rica, nevertheless, is allocated 34 million euros ($44.8 million) from the European Union budget of 2007-2013.

Regarding the budget for 2014 – 2020 the Union said all across Europe, governments, businesses and families are choosing carefully where to spend their money. And it is a time to think carefully about where to cut back and where to invest for the future.

The Union calls the strategy the “Agenda for Change.” It is intended to focus aid in fewer sectors where it can have the highest impact supporting democracy, human rights and good governance and creating inclusive and sustainable growth.

The Union stated that it will not stop providing aid to developing countries. All developing countries will remain eligible under proposed development instruments. The European Union will only stop giving money to countries
they deem as wealthier with economies on what they called a sustained development track.

Andris Pielbags, the European Union’s development commissioner, said because these countries have become upper-middle income countries, their gross domestic product growth can ensure their own development.

This includes Costa Rica, as well as the countries of Argentina, Brazil, Chile, Colombia, Ecuador, Mexico, Panama, Peru, Uruguay and Venezuela.

The countries that can generate enough resources to ensure their own development will graduate from a category where a percentage of 23,295 million euros ($30.7 million) were guaranteed, to another category where 1,131 million euros ($1.5 million) will be a blend of grants and loans. And more use will be made of innovative financing arrangements set up with international financial institutions, with European Union funds acting as a catalyst for leveraging investment in infrastructure, according to a European Union announcement.

The Ministerio de Relaciones Exteriores could not comment on the amount of funds expected from Costa Rica´s new status.

The package will be transmitted to the European Parliament and the European Council and is expected to be adopted in 2012.

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