In the bidding held by the Costa Rican Ministry of Finance other bidders including JP Morgan, Barclays, Credit Suisse and HSBC have been ruled out.
The Costa Rican government announced that Citigroup and Deutsche Bank will be responsible for technical advice for the placement of up to $4 billion in Eurobonds.
Both their technical as well as economic proposals were the most favorable for the country, according to information from the Deputy Minister of Investment and Public Credit, Juan Carlos Pacheco.
According to Costa Rican Central Bank President Rodrigo Bolaños, interest rates will continue to rise and the fiscal deficit is not sustainable.
In an interview with the website ElFinanciero.com Central Bank President Rodrigo Bolaños revised economic projections and reviewed issues such as interest rates, the fiscal deficit and current market liquidity.
The inflexibility of the rules governing its operation is the main impediment to its development.
A World Bank consultant considers the rigidity of the current Regulatory Law for the Securities Market (LRMV), an obstacle to its development beyond being almost exclusively the domain of transactions of securities issued by the government.
The Costa Rican National Stock Exchange, since the late 90's has been the subject of the constant disenrollment by investors, which has removed dynamism and attractiveness, while limiting the money supply for the needs of businesses.
The Central Bank of Costa Rica (BCCR) has announced that the country will close 2011 with a growth rate of 4% and a fiscal deficit equal to 5% of GDP.
Rodrigo Bolanos, president of the BCCR said at a press conference that the growth of 4%, is lower than last July’s projection of 4.5%.
"According to Bolaños,it has been a year of little growth in important sectors of the economy which are still suffering the effects of economic crises in previous years such as agriculture, which barely registered a rise of 0.5%, construction (0.1 %) and manufacturing (3 %)", reported Efe.
The Chairman of the Central Bank believes that the regulations need to be modified.
As part of the ‘Jornada de Reflexión’ (Day of Reflection), organized by the National Stock Exchange in commemorating its 35th anniversary, a discussion took place on the major changes that need to be made to the market in order to make it suit the prevailing reality in global financial markets.
"The job of a central bank is not to accelerate the growth of the economy" said Rodrigo Bolaños, President of Banco Central de Costa Rica.
The Costa Rican economy is not currently showing the previous dynamism shown in the period from the mid-nineties to the global crisis of 2008. Its recovery from the crash has been slower than expected, and in the search for solutions by various productive sectors corrective measures for the economy are being called for.
Markets closed with the dollar at ¢518.34, ¢7.88 higher than the day before, after the Costa Rican Central Bank's (BCCR) decision to increase foreign exchange reserves.
Since the BCCR announced the news, the dollar's price increased steadily, reaching a high of ¢523,01 before finally closing at ¢518.34.
Rodrigo Bolaños, president of BCCR, said that, "in the coming days it will be interesting to see what direction the exchange rate takes because just the announcement alone has caused it move up by several colones," reports Nacion.com.
The monetary authority has launched a scheme to acquire international reserves, immediately causing the exchange rate to rise.
In his blog for Nacion.com the analyst Jorge Guardia highlights that this intervention represents a trimming and sprucing within the limits and a fundamental change in Central Bank (BCCR) policy that lacked due transparency.
The difference in the interest paid by banks on deposits and loans can be as much as 22%.
Intermediation margins are a measure how a financial sector performs its mediation role and is one indicator of efficiency. Though there are various ways to calculate the figure, Costa Rica's margin is higher than in other economies.
Gabriela Mayorga López in Elfinancierocr.com comments on a study from the Costa Rican Banking Association (ABC in Spanish) that indicates that in June, "Banco Promérica recorded the largest colones margin with 21.8%. It was followed by Citi with 14.3% and Banco General with 14%. Banco Popular had the highest dollar margin with 7.8%".