IMF Executive Board Completes the First and Second Reviews Under Costa Rica’s Extended Arrangement under the Extended Fund Facility; and Approves Extension of the Arrangement and Rephasing of Access
March 25, 2022
- The IMF Executive Board concluded today the combined first and second reviews under the Extended Fund Facility (EFF) for Costa Rica, allowing for an immediate disbursement equivalent to about US$ 284 million.
- The Costa Rican authorities have made important progress under their economic reform program supported by the IMF over the last year. Sustained reform efforts remain critical to strengthen the economy resilience to shocks and to foster inclusive and sustained growth and job creation.
- The extension of the EFF arrangement will provide additional time for the incoming administration to design and implement reforms under the IMF-supported program.
Washington, DC: The Executive Board of the International Monetary Fund (IMF) completed today the First and Second Reviews of Costa Rica’s economic reform program supported by the IMF’s extended arrangement under the Extended Fund Facility (EFF). Completion of these reviews makes available SDR 206.23 million (about US$ 284 million), bringing total disbursements under the arrangement to SDR 412.57 million (about US$ 569 million). The Executive Board also approved an extension of the arrangement by five months, until July 31, 2024, and a rephasing of access.
Costa Rica’s three-year extended arrangement was approved on March 1, 2021, in the amount of SDR 1.23749 billion (US$1.778 billion or 335 percent of quota in the IMF at the time of approval of the arrangement. See Press Release No. 21/53 ).
Following the Executive Board’s discussion on Costa Rica, Mr. Kenji Okamura, Deputy Managing Director and Acting Chair of the Board, issued the following statement:
“The Costa Rican authorities have made important progress under the IMF-supported program, including a strong fiscal overperformance in 2021 and major advances in strengthening the efficiency and fairness of the public administration.
“While the proactive response to the COVID-19 shock and sustained export performance have supported a robust recovery, the economic outlook remains subject to important global risks posed by the pandemic as well as higher commodity prices and tighter global financial conditions. It is therefore important to build on recent progress to ensure debt sustainability, maintain monetary and financial stability, and promote inclusive, green, and sustainable growth.
“Sustained fiscal consolidation under the fiscal rule remains a priority, while continuing to allocate adequate resources to protect the most vulnerable. Further efforts are needed to enhance revenue mobilization and public financial management.
“The Central Bank of Costa Rica (BCCR) provided key support in buffering the COVID-19 shock. Given the stronger inflation outlook, the ongoing withdrawal of monetary accommodation is warranted, in line with the BCCR’s data-dependent and forward-looking approach, supported by continued exchange rate flexibility. Ongoing steps to further enhance the BCCR’s law will underscore its operational autonomy and governance. The central bank’s roadmap to integrate climate change considerations into its core activities is commendable.
“The financial system has shown resilience throughout the pandemic due to supportive monetary policy and a proactive approach to monitoring risks and updating contingency plans. Ongoing efforts to monitor credit risks, enhance the crisis management framework and incentivize de-dollarization remain critical.
“The authorities should press ahead with their ambitious reform agenda to promote an inclusive and green economy, creating high-quality jobs, for which greater formalization and digitalization, financial inclusion, women’s economic empowerment, and the transition to a lower carbon economic model will be instrumental. The extension of the current EFF arrangement will provide additional time for the incoming administration to design and implement reforms under the IMF-supported program.”
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Costa Rica: Selected Economic and Financial Indicators |
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Projections |
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2019 |
2020 |
2021 |
2022 |
2023 |
2024 |
2025 |
2026 |
2027 |
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Output and Prices |
(Annual percentage change) |
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Real GDP |
2.4 |
-4.1 |
7.5 |
3.6 |
3.3 |
3.2 |
3.2 |
3.2 |
3.2 |
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GDP deflator |
2.6 |
0.2 |
2.0 |
3.3 |
3.4 |
3.1 |
3.0 |
3.0 |
3.0 |
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Consumer prices (period average) |
2.1 |
0.7 |
1.7 |
4.8 |
3.7 |
3.2 |
3.1 |
3.0 |
3.0 |
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Savings and Investment |
(In percent of GDP) |
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Gross domestic saving |
14.8 |
14.7 |
15.6 |
16.0 |
16.3 |
16.3 |
16.4 |
16.4 |
16.5 |
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Gross domestic investment |
16.1 |
15.8 |
18.9 |
19.1 |
19.2 |
19.2 |
19.1 |
19.0 |
19.0 |
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External Sector |
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Current account balance |
-1.3 |
-1.1 |
-3.2 |
-3.1 |
-2.9 |
-2.8 |
-2.8 |
-2.6 |
-2.6 |
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Trade balance |
-6.0 |
-2.9 |
-4.9 |
-6.6 |
-7.4 |
-7.4 |
-7.3 |
-7.3 |
-7.3 |
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Financial account balance |
-2.0 |
-1.9 |
-3.2 |
-3.1 |
-2.9 |
-2.8 |
-2.7 |
-2.6 |
-2.5 |
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Foreign direct investment, net |
-4.2 |
-2.6 |
-5.5 |
-5.1 |
-5.0 |
-4.9 |
-4.8 |
-4.8 |
-4.7 |
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Gross international reserves (millions of U.S. dollars) |
8,937 |
7,232 |
6,921 |
8,611 |
9,081 |
9,951 |
9,957 |
10,478 |
11,278 |
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External debt |
47.6 |
50.6 |
52.2 |
58.0 |
58.3 |
59.0 |
58.0 |
57.0 |
56.1 |
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Public Finances 1/ |
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Central government primary balance |
-2.6 |
-3.8 |
-0.3 |
0.7 |
1.3 |
1.8 |
2.0 |
2.1 |
2.3 |
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Central government overall balance |
-6.7 |
-8.4 |
-5.2 |
-4.5 |
-3.6 |
-3.0 |
-2.5 |
-2.3 |
-2.0 |
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Central government debt |
56.4 |
67.2 |
68.5 |
68.6 |
68.3 |
67.5 |
66.3 |
65.0 |
63.4 |
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Money and Credit |
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Credit to the private sector (percent change) |
-2.3 |
3.4 |
2.8 |
3.8 |
6.0 |
6.0 |
6.0 |
6.2 |
6.2 |
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Monetary base 2/ |
7.1 |
8.3 |
7.9 |
8.0 |
8.2 |
8.3 |
8.4 |
8.3 |
8.4 |
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Broad money |
44.8 |
55.0 |
54.0 |
53.0 |
53.1 |
53.2 |
53.2 |
53.1 |
53.1 |
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Memorandum Items |
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Nominal GDP (billions of colones) 3/ |
37,832 |
36,356 |
39,832 |
42,592 |
45,464 |
48,342 |
51,352 |
54,541 |
57,927 |
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GDP per capita (US$) |
12,691 |
12,118 |
12,381 |
12,663 |
13,267 |
13,787 |
14,364 |
14,971 |
15,602 |
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Unemployment rate |
12.4 |
20.0 |
13.7 |
13.0 |
12.0 |
10.5 |
9.5 |
9.0 |
8.8 |
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Sources: Central Bank of Costa Rica, and Fund staff estimates. |
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1/ For comparison purpose, starting from 2019, central government figures include public entities that are consolidated under the central government from 2021 onwards as required by Law 9524. |
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2/ We use a narrower definition of monetary base that includes only currency issued and required reserves. |
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3/ National account data reflect the revision of the benchmark year to 2017 for the chained volume measures, published in January 2021. |
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IMF Communications Department
MEDIA RELATIONS
PRESS OFFICER: Randa Elnagar
Phone: +1 202 623-7100Email: MEDIA@IMF.org