To ensure financing for its future functions, the Costa Rican government will seek loans from the World Bank, IDB, CABEI and CAF during 2020, and plans to insist on the approval of $4.5 billion in Eurobonds.
For this year, the Costa Rican government plans to continue negotiating loans for budget support with the World Bank, the Inter-American Development Bank (IDB), the Central American Bank for Economic Integration (CABEI) and the Andean Development Corporation - Latin American Development Bank (CAF).
Arguing that the current account deficit has been reduced, and that inflation remains within the target range, the International Monetary Fund approved the first revision of the Stand-By 2019-2021 agreement.
From the press release by IMF:
On December 18, 2019, the Executive Board of the International Monetary Fund (IMF) completed first reviews of Honduras’ performance under an economic program supported by a two-year Stand-By Arrangement (SBA) and a two-year arrangement under the Standby Credit Facility (SCF). This program was approved on July 15 th, 2019 in the amount of about US$ 309.2 million (SDR 224.8 million), the equivalent of 90 percent of Honduras quota in the IMF (see Press Release 19/285 ).
As a result of the debt that the National Electric Energy Company has with the generators, the business sector fears that in 2020 there will be rationing in the supply of electricity.
For the Honduran Council of Private Enterprise (Cohep), it urges that the Honduran government cancel the debt to the power generators, which totals about $568 million. If the obligations are not paid, severe service rationing could be reported in the middle of next year, according to productive sector forecasts.
Arguing that continuity in economic policies is expected after the change of administration in January 2020, Standard & Poor's maintained the country's credit risk rating at BB-.
From S&P report:
S&P Global Ratings confirmed its long-term sovereign credit ratings of "BB-" in long-term foreign currency and "BB" in Guatemala. The outlook for our long-term ratings remains stable. We also affirmed our short-term 'B' foreign and local currency ratings in Guatemala, the international agency reported.
As of August 2019, the balance of the country's public external debt reached $6,116 million, 3% higher than the amount reported at the close of 2018.
Between December 2018 and August 2019, the ratio of debt to GDP also increased, from 45.4% to 49.3%, according to the most recent report by the Nicaraguan Foundation for Economic and Social Development (Funides).
With the deadline for Congress to approve the 2020 public budget expiring, the Guatemalan government must work with the 2019 budget, so some investments in public infrastructure could come to a halt in the first months of the year.
Last November 30, the deadline for the Congress of the Republic to approve the draft budget of income and expenditures of the nation for 2020, which amounted to Q91.9 billion ($11.9 billion) and was not endorsed by most deputies.
Up to September 2019, the external debt of the public sector reached $7.285 million, a figure that is $93 million lower than that reported at the close of 2018.
At the end of the third quarter, the external debt of the public sector registered a US$7,285.0 million balance, decreasing 1.3% (US$92.9 million) compared to December 2018. This behavior is derived from a net amortization of US$59.5 million (disbursements received for US$149.5 million lower to the principal payments of US$209.0 million), added to a favorable exchange variation that reduced the balance by US$33.4 million (product of the appreciation of the dollar against other currencies).
Fitch Ratings decided to keep the country's risk rating at B, but changed the outlook from negative to stable, arguing that there are some signs of stabilization of Central Bank reserves and commercial bank deposits.
The revision of the outlook reflects the stabilization of central bank reserves and commercial bank deposits, a significant fiscal adjustment and social security reform that have reduced domestic financing needs and a pronounced external rebalancing that has facilitated the external financing requirement, the rating agency reported.
On November 12, the debt securities were sold in the international market, and at the end of the negotiation, bonds were issued for $1.2 billion maturing in 2031 and $300 million maturing in 2045.
The negotiation of the public debt issued by the government of Costa Rica in the international market closed at noon on November 12, and the yield for those maturing in 2031 was 6.25% and for those expiring in 2045 was 7.25%.
Standard & Poor's warned that if in the coming months the political environment worsens or access to local and external financing deteriorates again, the debt note could suffer further deterioration.
Standard & Poor's has given a B+ rating to the $1.5 billion debt issue that Costa Rica expects to place in the international market in November.
"Global Ratings today assigned a "B+" rating to the prospective reopening of Costa Rica's notes which have a 7.158% rate maturing in 2045 and a "B+" rating in its planned issuance of notes maturing in 2031, the latter issue still does not have a defined trading rate," the rating agency said on November 8.
Fitch Ratings kept in B+ with a negative outlook, the sovereign debt rating, arguing that "the weaknesses in public finances are reflected and the political stagnation has prevented the timely approval of reforms that address these problems."
The new fiscal rule has not been approved, and the Congressional authorization requirement for foreign loans periodically restricts Costa Rica's financial flexibility, is another of the risk qualifier's arguments.
Up to August 2019, the external debt of the public sector amounted to $7.290 million, a figure that is $88 million lower than that reported at the close of 2018.
The public sector recorded an external debt balance of US$7,289.9 million up to August 2019, lower by 1.2% (US$88.0 million) compared to the closing of the previous year. The above is explained by a net amortization of US$60.1 million (principal payments of US$194.6 million versus disbursements received of US$134.5 million), partially offset by a favorable exchange variation of US$27.9 million, result of the appreciation of the dollar against other currencies.
Honduras approved a loan agreement with Taiwan's Export-Import Bank, which will be used in part to strengthen health and education infrastructure.
The credit at the international level was approved through Executive Agreement 499-2019, which contemplates in its recitals that it will serve for budgetary support "aimed at addressing priority issues of national interest aimed at economic reactivation."
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