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Thursday, September 29, 2022

IDB approves $500 million loan for Costa Rica

The Inter-American Development Bank (IDB) said Wednesday that it has approved two loans to Costa Rica totaling $500 million.

“Costa Rica will press ahead with its structural fiscal reforms program aimed at boosting fiscal management efficiency and equity and promoting sustainable economic recovery with two loans totaling $500 million approved by the Inter-American Development Bank,” the Washington, D.C.-based financial agency reported.

“The operations will provide budget support to the country and support policy reforms to ensure fiscal sustainability and uphold short- and medium-term macroeconomic stability.”

One of the two $250 million loans will complement the country’s economic reforms that were part of the Costa Rica’s agreement with the International Monetary Fund (IMF). It will also support “assistance for households and businesses affected by the Covid-19 crisis.”

The second operation “will contribute to strengthening public finances and fostering solid economic recovery in the post-pandemic stage.”

The IDB did not specify the interest rate for either loan but said they will be based on the London Inter-bank Offered Rate (LIBOR), an international benchmark. The first has a seven-year term following a three-year grace period; the second has a 20-year term after a 5.5-year grace period.

Costa Rica’s total active portfolio with the IDB is for $1.4 billion, much of which is earmarked for improving the transportation sector.

“The government’s commitment to the health and stability of public finance and the goals of the National Decarbonization Plan 2018-2050 will be key elements in deepening the Bank’s actions under the pillars of this country strategy,” the IDB says.

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