SAN JOSE – A bitter row has broken out in Costa Rica’s Congress after opposition parties said they would not support President Laura Chinchilla’s plans to tackle its yawning budget deficit until she dismisses two members of her cabinet.

Chinchilla on Tuesday refused to submit to demands from the opposition after the two ministers were found to have violated an ethics code by a congressional watchdog for helping the wife of a former cabinet colleague win a contract.

Costa Rica’s deficit has swollen to more than 5 percent of gross domestic product and the package blocked by Congress also aims to improve tax collection and close loopholes.

Chinchilla’s centrist National Liberation Party has no majority in Congress and relies on the opposition to pass bills.

The fiscal measures include the planned sale of $4 billion in eurobonds which the government hopes will help realize savings on its interest payments. Costa Rica planned to sell an initial $500 million tranche before the end of 2012.

Vice President Luis Liberman and Education Minister Leonardo Garnier were censured last week by the Council of Ethics, a body appointed by the president and Congress, for writing letters of recommendation for Flora Isabel Rodriguez.

Rodriguez is the wife of former finance minister Fernando Herrero, who resigned in a tax evasion scandal earlier this year.

The letters were part of a bid for consultancy work for state oil refinery Recope in 2011, which Rodriguez won.

“We won’t approve these measures until the president takes responsibility and considers the recommendations of the Ethics Council report demanding the resignation of the vice president and Minister Garnier,” Oscar Lopez, leader of the Accessibility without Exclusion Party, told Costa Rican radio.

Chinchilla will not ask for their resignations and rejected the report’s findings, said Communications Minister Francisco Chacon.

Analysts said political gridlock is likely to ensue.

“What we are facing now is the possibility of a political paralysis that could last several months,” said Juan Carlos Hidalgo, a political analyst at the Cato Institute.

“Although the eurobonds program is one the country needs urgently, I don’t think the president will swallow her pride and give in to the demands of Congress.”

The controversy over the recommendation letters is the latest in a series of corruption and political scandals that have rocked the government over the past six months.

Since Chinchilla took power two years ago, 11 out of 23 ministers in the cabinet have given up their posts.

Manuel Rojas, a political analyst at Costa Rican think tank Flacso, said the resignations reflected badly on Chinchilla.

“She doesn’t have the capacity to promptly get rid of the people in her team when they do something wrong, and so the perception is that she is not in control of the ship,” he said.

Source: Reuters