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.



More on this topic

Fiscal Crisis: Less Spending and More Information

January 2021

Given the agreement reached by the Alvarado administration and the IMF for Costa Rica to access a $1.75 billion loan, the business sector is calling for a reduction in public spending and for detailed information on the scope of the agreement signed by both parties.

In an attempt to ease the fiscal and economic crisis the country is going through, last year the Alvarado administration began negotiations to access a loan for $1.75 billion to be requested from the International Monetary Fund (IMF).

Costa Rica: $300 Million More Debt to Face the Crisis

July 2020

The Central American Bank for Economic Integration approved a line of credit for the country to reinforce its fiscal sustainability and strengthen its macroeconomic stability, in the context of the economic crisis that arose from the outbreak of covid-19.

In this way, Costa Rica becomes the first nation to receive the maximum amount of $250 million per year available for each country under the Development Policy Operations Program (DPO), reported the international organization.

Costa Rica Keeps Getting into Debt

October 2019

The Legislative Assembly approved a $35 million loan from the Inter-American Development Bank to "support the country in the implementation of its fiscal reform program.”

At the beginning of July, in the midst of the controversy generated by the recent implementation of fiscal reform in Costa Rica, the approval of a credit to strengthen fiscal sustainability was announced.

IMF to Provide Financing to Honduras

May 2019

The entity and the Honduran government agreed to "a combined credit facility of Special Drawing Rights and 24-month Extended Credit Service, for $311 million."

For the country's business sector, the agreement between the International Monetary Fund and Honduras "represents a commitment by the government to maintain macroeconomic stability, a fundamental pillar that favors the country's competitiveness and creates the minimum conditions for the promotion of investment. See "Cohep Expects IMF Agreement to Maintain Macroeconomic Stability".

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