Less Investment in Costa Rican Debt Securities

Because of fiscal uncertainty, in the first months of 2018, banks operating in the country reduced by 16% the amount invested in public debt securities in the local market.

Friday, December 7, 2018

Against the backdrop of doubts about the future of public finances in Costa Rica, it was reported that from January to September, 14 local public and private banks invested $3.190 million in government bonds.

See "A Fiscal Short Break for Costa Rica"

According to figures from the Central Bank of Costa Rica, between the first nine months of 2017 and the same period this year, banking sector investments in public bonds went down from $3.787 million to $3.190 million.

On the other hand, Rossy Durán, corporate finance manager of the Banco de Costa Rica, said to Nacion.com that "... the entity established a follow-up of Hacienda's issues among its risk analysis. It is unclear whether next year the reduction will continue or be reversed, as it will depend on the evolution of the credit in 2019."

Also see "Tax Reform: First Step"

On the subject, Annabelle Ortega, executive director of the Chamber of Banks and Financial Institutions, emphasized that "... in the last year there was a lot of uncertainty because of the government's fiscal situation and repercussions on decisions. The behavior of credit will be determinant to decide the final pipeline of productive assets during 2019."

More on this topic

More Debt, But with Economic Recovery

March 2019

Faced with the Costa Rican government's plans to issue $6 billion in debt over six years, the productive sector demands that "parallel and complementary actions for economic reactivation" must be implemented.

Currently, the deputies of the Legislative Assembly of Costa Rica have in their hands the bill that would authorize the government to issue debt securities in the international market (Eurobonds), a proposal that contemplates that in the first two years $1.5 billion are issued each year, and that in the remaining four $3 billion are issued.

Costa Rica: Government Swaps $165 Million

February 2019

In the exchange of foreign currency debt that took place on February 6, the Ministry of Finance managed to negotiate $165 million of $428 million offered.

Grupo Prival reported that the debt that was swapped expired in 2019, 2020 and 2021, and now the bonds will expire in 2023 and 2026, which will give more looseness to the authorities to manage the country's public finances.

External Debt Plan Causes Concern

November 2018

In Costa Rica, the private sector anticipates adverse effects on the export and tourism sector's competitiveness if the Ministry of Finance succeeds in consolidating its plan to issue $6 billion in bonds in the international market over the next six years.

The reaction of the country's export sector comes after the government announced this week that it will ask the Congress for authorization to issue bonds in international markets for at least $5 billion.

Ambitious Plan for External Debt

November 2018

In Costa Rica, the Alvarado administration will ask the Congress for authorization to issue Eurobonds in international markets for at least $5 billion.

The Finance Minister, Rocío Aguilar, reported on November 20 that the country's public debt plans include the possibility of attracting more resources in the international market. One of the alternatives would be to place $5 billion in the next four years.

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