Costa Rica: $500 Million to Finance Public Spending

The Inter-American Development Bank approved two lines of credit totaling $500 million, resources that will be used by the Government to finance the public budget and policy reforms to ensure fiscal sustainability and maintain macroeconomic stability.

Thursday, May 6, 2021

One of the approved lines incorporates contingency measures to increase spending related to the health emergency and targeted support to households and businesses affected by the crisis, informed the Inter-American Development Bank (IDB).

Check out the "System for monitoring markets and the economic situation in Central American countries", prepared by CentralAmericaData.

According to the IDB, it also contemplates a structural increase in spending on social programs that benefit the most vulnerable populations, in order to reduce poverty and inequality and protect public investment in productive infrastructure.

The official statement notes that "... the second operation supports structural reforms to improve the effectiveness of the macro-fiscal institutional framework, increase the efficiency and progressiveness of the tax system, and improve efficiency and equity in the management of public spending. Together, these measures will help strengthen public finances and support a robust economic recovery in the post-pandemic period."

The two loans approved by the IDB have an amount of $250 million each and an interest rate based on LIBOR. The first loan, which complements the country's economic program agreed with the International Monetary Fund, has an amortization term of 7 years and a grace period of 3 years. The second, under the Programmatic Loan to Support Policy Reforms modality, has a 20-year repayment term and a grace period of 5.5 years, explained the international organization.

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