A group of Costa Rican economists is warning that the government’s plan to issue up to $13.5 billion in eurobonds is excessive, unnecessary in the short term and could add new pressure to the country’s public finances and exchange rate. The proposal, currently under discussion in the Legislative Assembly, would authorize the Executive Branch to place international debt in nine annual tranches of $1.5 billion between 2026 and 2034.
The government argues that the eurobonds would allow Costa Rica to refinance domestic debt, manage future maturities and seek better financing conditions in international markets. But three economists, including former Finance Minister Fernando Naranjo and former Central Bank president Rodrigo Cubero, say the size and timing of the request raise serious concerns.
Naranjo, president of the firm Consejeros Económicos y Financieros, described the proposed $13.5 billion authorization as excessive for a country the size of Costa Rica. He warned that additional foreign borrowing could deepen the country’s dependence on external debt at a time when fiscal risks remain unresolved.
Norberto Zúñiga, a consultant with Ecoanálisis, also questioned the need for such a large authorization. He noted that previous eurobond authorizations were far smaller and said any new approval should be based on a rigorous technical analysis of debt levels, interest rates, repayment terms and the ideal balance between local and foreign borrowing.
One of the central arguments from the economists is that the government does not appear to face an immediate liquidity emergency. According to the criticism, the government already has significant deposits in colones, dollars and euros at the Central Bank, reducing the urgency of another major international placement.
Cubero said eurobonds can be a legitimate part of a balanced financing strategy, especially when they help reduce refinancing risks or extend debt maturities. However, he argued that current conditions do not justify rushing into a new external placement, particularly given the government’s strong liquidity position.
The exchange-rate issue is especially important for Costa Rica. The colón has remained unusually strong against the dollar, with the official reference rate hovering near the mid-₡450s. That has helped consumers who buy imported goods or pay dollar-denominated obligations in colones, but it has hurt many people and businesses that earn income in dollars.
Cubero warned that an additional $1.5 billion eurobond placement could add more downward pressure on the dollar exchange rate. While the Central Bank can manage the flow of foreign currency to reduce volatility, the broader effect of external borrowing can still strengthen the colón by increasing the supply of foreign currency in the system.
That matters far beyond government finance. A stronger colón affects exporters, tourism businesses, foreign residents, retirees, remote workers and others who receive income in dollars but pay much of their daily expenses in colones. For a retiree living on a U.S. pension, a digital nomad earning in dollars or an investor evaluating Costa Rica, exchange-rate movements can directly change the cost of living.
The debate also has longer-term implications for taxes and public spending. If Costa Rica takes on more foreign debt without improving its fiscal position, future governments could face tighter budgets, higher debt-service costs or pressure to raise revenue. Economists critical of the plan argue that borrowing should not become a substitute for deeper fiscal management.
Government supporters say eurobonds can help Costa Rica avoid putting too much pressure on the domestic debt market. By borrowing abroad, the state may reduce competition for local credit and potentially obtain longer terms. They also argue that the country must prepare for large future debt maturities and avoid last-minute financing risks.
The dispute is not over whether Costa Rica should ever use eurobonds. The sharper question is whether the country needs authorization for $13.5 billion now, and whether such a large request gives current and future administrations too much room to expand foreign debt without enough conditions.
For all of us here in Costa Rica, the discussion is worth watching because it connects several issues that directly affect life in Costa Rica: the value of the dollar, public debt, interest rates, government spending and the possibility of future tax pressure.
The eurobond proposal will now continue through the Legislative Assembly, where lawmakers are expected to weigh the government’s financing arguments against calls for stricter limits and stronger fiscal safeguards.
