IMF confirms beginning of conversations with Costa Rica for $1.75 bn loan

The International Monetary Fund (IMF) on Thursday confirmed it has begun preliminary conversations with Costa Rica for a $1.75 billion loan.

At a press briefing, spokesperson Gerry Rice said the IMF is looking forward to its discussions with Costa Rica. The loan would help Costa Rica “expand economic plans to restore sustainable inclusive growth while protecting the most vulnerable,” Rice said.

When a country borrows through the IMF’s Extended Fund Facility (EFF), as Costa Rica intends, it “commits to undertake policies to overcome economic and structural problems,” according to the financial entity.

The Costa Rican Presidency presented those economic measures to the Legislative Assembly, and to the public, last week.

While the Presidency says an IMF loan is necessary to avoid a financial crisis rivaling that of the 1980s, the proposed fiscal adjustments have been met with significant resistance.

Deputy Eduardo Cruickshank, president of the Legislative Assembly, has said he doesn’t think it appropriate to approve more taxes, and instead suggested that the government prioritize tax evasion and exclusions.

The Presidency says government income has fallen by 1.2 trillion colones in 2020 as a result of the coronavirus pandemic and that “making decisions in this moment is necessary.”

Earlier this year, IMF approved a separate $504 million loan to Costa Rica for emergency assistance during the COVID-19 pandemic.