Press Release No. 13/67

Press Release: Statement by IMF Deputy Managing Director Naoyuki Shinohara at the Conclusion of His Visit to Costa Rica

March 7, 2013

Mr. Naoyuki Shinohara, Deputy Managing Director of the International Monetary Fund (IMF), made the following statement today in San José:

“It is a great pleasure to be in Costa Rica for my first visit to this nation of such natural beauty and rich culture. I had the privilege to meet President Laura Chinchilla, and had very productive meetings with Second Vice president Luis Liberman, Finance Minister Edgar Ayales and Central Bank President Rodrigo Bolaños. I also had the opportunity to meet several members of Congress and the Executive Secretary of the Central American Monetary Council. I would like to express my gratitude to the Costa Rican authorities for their warm welcome.

“Costa Rica is a beacon of political stability and social inclusion. The country’s high percapita income and impressive social indicators attest to its accomplishments in fostering strong and inclusive economic growth. Costa Rica’s resilience in the aftermath of the global financial crisis of 2008-09 also was an important achievement. Economic growth has rebounded strongly and is projected to continue, while inflation has fallen to the lowest level in many years.

“The authorities’ commitment to prudent macroeconomic policies is encouraging. The fiscal deficit remains high but the efforts at containing spending in the last two years despite the setback on the tax reform front have prevented a further deterioration. On monetary policy, the authorities have been successful in maintaining low inflation, and remain resolved to preserve the hard-won price stability. The financial system also remains sound.

“Preserving macroeconomic stability should be among Costa Rica’s main priorities. Reaching consensus on a medium-term fiscal consolidation strategy that lowers the fiscal deficit and stabilizes the public debt-to-GDP ratio would be the most useful step towards that objective. We also share the authorities’ concerns about risks stemming from the large private capital inflows observed over the past year. Mitigating those risks requires policy adjustments, including a tighter fiscal stance and vigilant monetary policy, and greater exchange rate flexibility.

“Overall, Costa Rica is well placed to maintain vigorous growth in a context of macroeconomic stability. The IMF will continue supporting the authorities in their efforts to achieve these objectives.”