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Saturday, October 1, 2022

Costa Rica signs $500 million loan with IDB

Costa Rica on Thursday made official two budget support loans with the Inter-American Development Bank (IDB), for an amount of $500 million.

The first of the loans, of $250 million, will be used to attend the health emergency caused by the Covid-19 pandemic, supporting homes and companies that have been affected, according to the Ministry of Finance.

The second will be for structural reforms in the fiscal area, which increase the efficiency of the tax system and public spending.

“We are confident that these operations will contribute to consolidating fiscal and economic stability,” said Elian Villegas, Costa Rican Finance Minister, during a ceremony with Fernando Quevedo, IDB manager for Central America.

The loans have repayment terms of seven and 20 years, respectively, with grace periods of three and five and a half years. Both credits still need to be approved by the Costa Rican Legislative Assembly.

On June 10, Congress had already given the green light to another bill for two credits of $600 million: 300 million also correspond to the IDB and another 300 to the Central American Bank for Economic Integration (CABEI).

The Inter-American Development Bank is one of the main sources of long-term financing for economic, social and institutional projects in Latin America and the Caribbean.

In March 2021, the International Monetary Fund (IMF) approved Costa Rica access to credits for more than $1.75 billion to support an economy that closed last year with a fiscal deficit of 8.7% and a debt of almost 70% of its GDP.

In return, Costa Rica has committed to a fiscal adjustment plan for the next three years.

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