Costa Rica’s economic outlook improves
Citing the Costa Rican government´s declining debt burden, Standard & Poor´s Ratings Services (S&P), one of the big three credit rating agencies, raised its outlook on Costa Rican government debt to positive from stable, according to S&P.
Credit ratings measure the risk of default of particular debt issuers, in this case the Costa Rican government. Other thing being equal, the lower the risk an issuer will default on its debt obligations, the lower the interest rate it will need to pay to borrow from markets.
A positive outlook implies that economic conditions in the country are considered to be improving.
S&P affirmed its BB/B foreign currency and BB+/B local currency sovereign credit ratings for Costa Rica. The ratings agency affirmed the BB+ long-term debt rating on Costa Rica´s foreign currency senior unsecured debt reflecting both default and recovery prospects. These ratings imply Costa Rican debt is “speculative/somewhat speculative” and that an investment in Costa Rican debt is among the safest investments in debt that is investment-grade.
According to S&P, buoyant tax revenues and continued good GDP growth have contributed to a decline in gross general government debt to an expected 32 percent of GDP at the end of 2008, compared with 41 percent in 2006.
S&P also noted that the ongoing improvement in Costa Rica´s fiscal and debt profile, combined with more exchange rate flexibility and a more effective monetary policy, could reduce Costa Rica´s vulnerability to sudden external shocks, potentially improving creditworthiness.
You may be interested
Costa Rica unemployment rate drops to 19%The Tico Times - March 4, 2021
Unemployment in Costa Rica fell to 19.1% in the moving quarter from November to January. This maintained a downward trend…
Throwback Thursday: 2006 Arenal Volcano lava flowsThe Tico Times - March 4, 2021
Arenal Volcano's July 1968 eruption destroyed three small villages, killed 87 people and wiped out 232 square kilometers of crops…
MOPT warns of higher traffic accidents as measures are easedAlejandro Zúñiga - March 4, 2021
The Public Works and Transport Ministry (MOPT) is reminding drivers to follow the rules of the road when traveling this…