"Clutching at Straws" in Costa Rica

The Central Bank explained that the short-term loan of almost $870 million to the Ministry of Finance will have no impact on inflation.

Wednesday, September 26, 2018

From a statement issued by the Central Bank of Costa Rica:

September 25, 2018. In accordance with what is authorized by Costa Rican legislation, the Board of Directors of the Central Bank of Costa Rica (BCCR) agreed, on Tuesday, September 25, 2018, to the acquisition of Treasury Notes, issued by the Ministry of Finance, for an amount of ¢498,858.8 million.

The Treasury Notes are included in article 52, subsection D of the Organic Law of the Central Bank of Costa Rica and article 75 of the Law of Financial Administration of the Republic and Public Budgets. In line with these legal provisions, the Treasury Notes will have a term of ninety days and an interest rate equivalent to the passive base rate.  

The Treasury Notes are an instrument of temporary and extraordinary financing from the Central Bank to the Ministry of Finance. Due to their temporary nature, the use of this instrument will not have an inflationary impact. In any case, the Central Bank will continue to direct its monetary policy and financial programming towards achieving its inflation target in the medium term. 

Read full article (In Spanish).

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