During the first semester, the government plans to issue up to $2.175 billion in debt securities through auction mechanisms and electronic windows in the local market.
According to the plan presented by the Ministry of Finance and the Central Bank, the debt figure "... contemplates issues through the mechanisms of auctions and electronic windows. This amount does not include loans made through internal debt placement contracts or debt swaps. In liabilities management, the plan is to continue swaps and reverse auctions."
Lack of fiscal reform continues to erode Costa Rica's public finances, constraining its long-term growth prospects and highlighting its vulnerability to external shocks.
Between today and February 14 the Ministry of Finance in Costa Rica will go to the local market with the goal of issuing $290 million, at a rate of 7% and maturing in 2019.
In its constant search for fresh resources to meet the interest payments on its growing debt as well as its current expenses, during the next few days the Ministry of Finance will return to the market to try to raise $290 million, through the issue of government debt bonds.
In line with the revision from stable to negative for the outlook for sovereign debt, Fitch Ratings has also downgraded the outlook for the debt of state banks and two private banks.
From a statement issued by Fitch Ratings:
Fitch Ratings-Monterrey/San Salvador-24 January 2018: Fitch Ratings has affirmed the Issuer Default Ratings (IDRs) of various Costa Rican banks and revised the Rating Outlook to Negative from Stable.
The Ministry of Finance has announced that within six weeks it will issue an internal debt bond for a maximum of $1.5 billion, under the model of "placement contract".
From a statement issued by the Ministry of Finance:
November 17, 2017.- The "Placement Contract" model is a new mechanism through which the Ministry of Finance will manage an internal debt placement for up to 1,500 million dollars, a relevant fact that was communicated this afternoon to the financial media.
The Ministry of Finance will be receiving bids for a minimum amount of $400 million in the local market, and the minimum issuance term will be five years.
The relevant fact published by the Ministry of Finance details that debt securities, which will pay out a fixed interest rate, will be sold through stock exchanges and banks in the local market, which can then be bought by foreign entities to sell them to international investors.
The government's financial deficit rose from 3.4% of GDP in September 2016 to 4% in the same month this year, explained by an increase in the financial cost of debt and an increase in capital expenditure.
From a statement issued by the Ministry of Finance:
At the end of September, the central government's revenue and expenditure figures reflect the need for comprehensive fiscal reform (via income and expenditure), which will make it possible to sustain the state's finances, as well as stability and continuity of social achievements which the country achieved throughout its history.
The fiscal deficit closed July 2017 at 2.9% of GDP, up from 2.4% of GDP in the previous month, due to an increase in the financial cost of servicing debt.
From a statement issued by the Ministry of Finance:
As of July 2017, revenues grew by 5.6% compared to July 2016, and expenses increased by 9.1% over the same period. 88% of the increase in spending is due to transfers, interest and investment in education and road infrastructure.
After recognizing the serious liquidity problems faced, the government has announced it will borrow another $1 billion for a hearty lunch that others will pay for tomorrow.
The $1 billion that the Central Bank of Costa Rica (BCCR) has been negotiating since May with the Latin American Reserve Fund (FLAR) to strengthen its reserves will arrive in October of this year, according to the BCCR authorities.
The government is preparing a bill for the Assembly to authorize a debt issue on the international market next year.
The Ministry of Finance is considering raising money abroad in order to avoid pushing interest rates up in the local market.If the Legislative Assembly approves the bill, the government will turn to the international market to raise the 1.2 trillion colones that it needs to pay for domestic debt securities due next year.
Tax revenues went from a rate of change of 7% in March 2016, to a rate of 8.5% in the same month of this year.
From a statement issued by the Ministry of Finance:
Authorities at the Treasury announced the performance of the central government's fiscal figures at the end of the first quarter of the year, which indicate how tax revenues continue to show good results, going from a rate of change of 7% in March 2016 to 8.5% in the same period this year.
In line with warnings from other ratings agencies regarding the serious fiscal problem and the lack of political will to solve it, Moody's has downgraded its rating from Ba1 to Ba2 with a negative outlook.
New York, February 09, 2017 -- Moody's Investors Service has today downgraded Costa Rica's government bond rating by one notch to Ba2 from Ba1, and maintained the negative outlook on the rating.
The borrowing plan presented by the Treasury for the first half of the year includes an issue of debt securities in the local market for up to $1.8 billion, mostly at a fixed rate.
From a statement issued by the Ministry of Finance:
The Ministry of Finance and the Central Bank of Costa Rica (BCCR) today presented their debt issuance plans for the coming months.
The debt rating has been lowered from BB + to BB, due to the high fiscal deficit and the lack of implementation of reforms to start correcting the problem.
From a press release by Fitch:
Fitch Ratings-New York-19 January 2017: Fitch Ratings has downgraded Costa Rica's Long-Term Foreign- and Local-Currency IDRs to 'BB' from 'BB+'. The Outlooks were revised to Stable from Negative.
The favorable conditions in the global economy allowed the country to grow by 4.25% in 2016, and administrative efforts to reduce the fiscal deficit were noted, however they will not prevent the debt /GDP ratio from growing.
From a press release by the IMF:
Costa Rica’s economy growing robustly, GDP expected to growth by 4.25% in 2016
More needs to be done to stabilize public debt levels
Key for government and Congress to reach consensus on VAT and income tax reforms proposals to help address fiscal imbalances