World Bank offers Costa Rica $500 million

February 6, 2009

Costa Ricans could have access to $500 million dollars of standby credit during the present economic crisis.

On Wednesday, the vice president of the World Bank for Latin America, Pamela Cox, visited San José and spoke briefly about pending and current loans to Costa Rica.

The World Bank loaned Costa Rica $65 million as part of the first Catastrophic Deferred Drawdown Option (CAT DDO), aimed at providing a source of immediate financing in the aftermath of a natural disaster. Costa Rica requested the disbursement after the 6.2 magnitude earthquake that occurred Jan. 8, killing as many as 30 people and leaving hundreds of families homeless.

The CAT DDO provides financing that may be disbursed partially or in full if the country declares a state of emergency as a result of a natural disaster.

The World Bank also approved a $72.5 million loan to revitalize the city of Limón and prepare the nearby port for modernization. The loan is awaiting approval by Costa Rica´s Legislative Assembly.

“This is a very important program for the Atlantic region,” said Finance Minister Guillermo Zúñiga. “We hope there will be a favorable outcome within the next few days so we can continue forward.”

Cox emphasized that the financial crisis is affecting every country in the world will. She said the World Bank plans to loan $35 billion worldwide, including $3 billion to Central America alone.

“This is why we are talking to Costa Rica about a financial agreement of $500 million to give help to the government in this difficult time,” Cox said.

That money would be available as standby credit, and Zúñiga thinks it would serve as a model credit line for the rest of the world.

Cox said that despite being affected by the financial crisis, Latin America was not its cause nor at its center, as the problems originated outside the region.

Cox says that one such problem is that some countries rely on the relatives in the United States who send them funds, and that in countries such as Mexico, Guatemala and El Salvador, these funds are dropping.

“In Guatemala, funds have dropped by 10 percent,” said Cox, “and this is a problem, specifically for the very poor.”

Thursday morning, Pamela Cox will hold a meeting to discuss global climate change and how the World Bank will contribute to solving that problem.

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