Press Release No. 24/220

IMF Executive Board Concludes the Sixth Review of Costa Rica’s Extended Fund Facility and the Third Review under the Resilience and Sustainability Facility

June 14, 2024

• The IMF Executive Board concluded today the sixth and final review under the Extended Fund Facility (EFF) for Costa Rica, allowing for a disbursement equivalent to about US$ 272 million.
• The IMF Executive Board also concluded the third and final review under Costa Rica’s Resilience and Sustainability Facility (RSF) arrangement, making available about US$ 243 million in support of Costa Rica’s ambitious climate change agenda. Costa Rica is the first member to complete an RSF arrangement.
• The authorities continue to make important progress on Costa Rica’s economic reform agenda. Going forward, the authorities should focus on institutionalizing the impressive progress over the past three years and sustaining reform momentum.

Washington, DC: The Executive Board of the International Monetary Fund (IMF) completed today the sixth review of Costa Rica’s economic reform program supported by the IMF’s extended arrangement under the Extended Fund Facility (EFF). Completion of this review makes available SDR 206.23 million (about US$ 272 million), bringing total disbursements under the arrangement to SDR 1237.49 million (about US$ 1.6 billion).

The Executive Board also concluded today the third review under Costa Rica’s Resilience and Sustainability Facility (RSF) arrangement. Completion of this assessment makes available SDR 184.7 million (about US$ 243 million), bringing total disbursements under the arrangement to SDR 554.10 million (about US$ 730 million).

Costa Rica’s three-year extended arrangement under the EFF 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) and was extended by five months on March 25, 2022 (see Press Release No. 22/91).

Costa Rica’s RSF arrangement was approved on November 14, 2022, in the amount of SDR 554.1 million (about US$ 725 million or 150 percent of quota in the IMF at the time of approval of the arrangement, see Press Release No. 22/382). Its duration coincides with the period remaining under the EFF, disbursements under the RSF being contingent on the conclusion of relevant reviews under the EFF and implementation of scheduled reform measures. The sixth EFF and third RSF reviews mark the final reviews of both arrangements. Costa Rica is the first country to complete an RSF arrangement, doing so having implemented all twelve targeted reform measures.

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 completion of the reviews marks the successful conclusion of an ambitious, multi-year, multi-dimensional reform program, under which the authorities demonstrated strong commitment to a broad-based homegrown reform program that is helping reshape Costa Rica’s economy and advance the climate agenda. Growth has remained strong and inflation is rising to the lower end of the central bank’s tolerance range. Formal employment, private-sector wages and poverty are all moving in the right direction. 

“The central bank has appropriately lowered the policy rate and its data-dependent, forward-looking approach should continue to help inflation rise back to target. It is critical to institutionalize the central bank’s autonomy as well as clarify its mandate and decision-making processes through comprehensive legal reforms as soon as circumstances are propitious.

“The supervisory authorities should continue to enhance their toolkits to strengthen financial sector resilience. A recently submitted bill to amend the bank resolution and deposit insurance law would help strengthen the crisis management framework and the financial safety net and should be approved quickly.

“Following another strong fiscal performance, the authorities’ firm commitment to further spending-driven consolidation will reduce debt and interest burdens and create space for capital and social investment. To simultaneously achieve these objectives, legislative changes that erode revenue should be avoided and the coverage of the fiscal rule should be maintained.

“Keeping the momentum of structural reforms is critical to achieving greener and more inclusive growth. The new social assistance single window is increasing the quality of social spending. It is critical for the public employment bill to be fully implemented by all affected institutions. Reforms supported by the RSF arrangement are helping to reduce risks to prospective balance of payments stability and aiding ongoing efforts to attract private-sector finance.”