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Friday, May 27, 2022

Costa Rica President-elect Chaves wants to ‘improve’ deal with IMF

Costa Rica aims to improve its deal with the IMF, president-elect Rodrigo Chaves said  Monday, a day after his election as the Central American nation’s next president.

He was referring to the deal signed by the International Monetary Fund (IMF) and the outgoing government for a loan of more than $1.7 billion. 

“The IMF is not a source of resources for government financing needs. We see it as an instrument to give confidence to those who have to lend us money, (as proof) that Costa Rica will be able to honor its debts,” said Chaves, a former World Bank executive for nearly 30 years. 

“The Fund needs to be grateful to us for more ambitious public policy measures in terms of economic recovery and fiscal responsibility” in order to allow Costa Rica to have access to funding from other bodies, he said.

“We are not going to relax the commitment (made to the IMF) for sound and responsible public finances,” he stressed. 

At the end of March, the IMF approved the second installment of $284 million provided for in the agreement signed on March 1, 2021, while giving Costa Rica more time to carry out the reforms agreed to in order to reduce its public deficit. 

The IMF demanded in particular the adoption of a law on pensions and public employment in order to reduce public spending.

Costa Rica ended fiscal year 2021 with a deficit of 5.18% of GDP, compared to 8.03% in 2020. Public debt stands at over $42.4 billion (over 70% of GDP).

by Moises AVILA / David GOLDBERG

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