Costa Rica: IMF Endorses $1.778 Billion Loan

The financial resources that the IMF will lend to the Costa Rican government will be used to mitigate the fiscal crisis, strengthen monetary and financial stability, and boost economic recovery in the context of the pandemic crisis.

Tuesday, March 2, 2021

On March 1, the Executive Board of the International Monetary Fund (IMF) approved Costa Rica's request for an IMF Extended Fund Facility (EFF). This is a financial support program for three years, for an amount of approximately $1,778 million, at the current exchange rate, and which supports the policies proposed by the country's authorities to achieve fiscal sustainability, strengthen monetary and financial stability and boost economic recovery in the context of the crisis caused by the pandemic, informed the Central Bank of Costa Rica (BCCR).

The statement explained that "... last January 22, Costa Rica and the IMF had reached an agreement at the staff level on the EFF. Today's decision by the IMF Board finalizes the approval process at the IMF. Following this, the Government of the Republic will send the loan to the Legislative Assembly in the next few days."

The BCCR document states that the "... agreement with the IMF constitutes an endorsement of the fiscal, monetary and financial policies of the national authorities. As a result, the SAF agreement will allow the country to obtain better financing conditions in local and international markets."

For its part, the IMF reported that "... In addition to supporting the recovery, the IMF-supported program aims at achieving macroeconomic stability and advancing the country's reform agenda. The authorities' policy initiatives under the program will be articulated around three key pillars:
i) gradually implementing balanced fiscal reforms to ensure debt sustainability, while protecting the most vulnerable;
ii) maintaining monetary and financial stability, while continuing to strengthen the operational autonomy and governance of the central bank and addressing structural financial vulnerabilities;
iii) advancing key structural reforms to promote inclusive, green, and sustainable growth.

See full IMF statement.

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