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The commitments Costa Rica made with the IMF

March 2, 2021

Costa Rica will receive a three-year, $1.78 billion loan from the International Monetary Fund as part of the financial entity’s Extended Fund Facility (EFF).

“When a country borrows from the IMF, it commits to undertake policies to overcome economic and structural problems,” the IMF says. “Under an EFF, these commitments, including specific conditions, are expected to have a strong focus on structural reforms to address institutional or economic weaknesses, in addition to policies to maintain macroeconomic stability.”

Costa Rica’s objective is to stabilize country’s public debt and reach a primary surplus of 1% by 2023.

These are the law projects Costa Rica has agreed to as part of its IMF deal:

Measures that are part of the proposal

Law projects

  • Public Employment Framework Law (See bill) –

    • This initiative seeks to create a single framework for employment in the public sector, with eight salary scales. The government says this would simplify public employment and help contain the increase in spending on salaries charged to the state budget.

  • Law on Reduction of Tax Benefits and Adjustment of Rates on Capital Income to Strengthen the Tax System (See bill)

  • Special Tax Law on Lottery Prizes and Other Gambling Sold, Distributed or Marketed by the Social Protection Board (See bill) 

    • This initiative would levy a 25% tax on lottery prizes that exceed half a base salary (₡225,000, or about $375).
  • Reform of the General Customs Law (See bill)

  • Reduction of Public Expenditure through the Elimination of Vacancies and Freezing of Pension Increases from the National Budget (over 450,200 colones and until the public debt is less than 60% of GDP) (See bill)

  • Tax on luxury homes (amending the current one) (See bill)

    • Luxury homes would pay an annual 0.5% tax. This tax would impact all luxury properties for housing, occasional or recreational use, whose value is equal to or greater than ¢150 million (that is, about $250,000, or the equivalent of 325 basic salaries for each year).
  • Dual Global Income (See bill)

    • This would impact Costa Rican taxpayers who earn more than 8.2 million colones per year (about $13,400). Replacing the current system that taxes different incomes via different processes, all earnings would be reported via a single filing. Depending on the amount, it would be taxed between 10 and 27.5%.
  • Law of Solidarity and Temporary Contribution on the Utility of Public Companies to the Costa Rican People for Fiscal Adjustment (See bill)

  • Sale of the Conape Portfolio (Multisectoral Dialogue Agreement)

Executive decrees 

  • Executive Decree 42798-H for compliance with the tax rule in current transfers, acquisition of goods and services, special services, substitutions and eventual remuneration. (See decree)

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