The President of the Central Bank, Rodrigo Cubero, and the Minister of Finance, Elian Villegas, sent a letter to the Managing Director of the International Monetary Fund (IMF), Mrs. Kristalina Georgieva, to request the start of negotiations towards a financial assistance agreement for 3 years within the framework of an Expanded Service instrument, for an amount of around $ 1,750 million.
This agreement would help meet the needs for budget support and balance of payments. “The agreement would provide a policy anchor for our fiscal consolidation plans for the period necessary to achieve a primary surplus and place debt on a clear downward trajectory,” the letter states. She adds that “this, in turn, is necessary to ensure a vigorous economic recovery from the pandemic and a greater trajectory of economic growth in the medium term.”
According to data from the Central Bank, the Gross Domestic Product (GDP) will decrease by 5% this year, as a consequence of the crisis caused by the pandemic, with a gradual recovery from 2021. It is projected that the sharp fall in fiscal income as a result The crisis will lead to a fiscal deficit of more than 9% of GDP this year, and the Central Government’s debt will reach almost 70% of GDP.
“This medium-term agreement with the IMF would provide important resources to the Central Government under favorable conditions and would allow access to additional financial resources by international financial organizations,” said Minister Villegas.
Mr. Cubero, President of the Central Bank, stated that “this agreement would also provide a seal of confidence in the framework of macroeconomic policies and in the fiscal consolidation efforts of the Government of Costa Rica, which in turn would allow better conditions to be reached financing in the domestic and international markets and strengthen the path of economic growth in the medium term ”.
Finally, Pilar Garrido, coordinator of the Economic Team, indicated that “this agreement is critical within the fiscal consolidation route to provide investors with confidence that we will take all the necessary actions, in a responsible and technical way, to enable potential growth. inclusive and sustainable ”.