Government and BCCR conclude preliminary discussions for rapid financing program with the International Monetary Fund

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This Thursday, April 16, 2020, authorities from the Government of the Republic and the Central Bank of Costa Rica (BCCR) concluded preliminary discussions with a team from the International Monetary Fund (IMF), regarding the granting of a fast line of financing to the country to attend to the emergency caused by the covid-19 pandemic.

The President of the Central Bank of Costa Rica, Rodrigo Cubero, and the Ministers of Finance, Rodrigo Chaves, and of National Planning and Economic Policy, Pilar Garrido, participated in the meetings with the IMF mission. The mission also held meetings with Bernardo Alfaro, Superintendent of the General Superintendence of Financial Entities (SUGEF) and with the technical teams of the Central Bank and the Ministry of Finance. The IMF team is led by Inci Otker, Director of the Central America Division of the Western Hemisphere Department.

For two days, the Costa Rican authorities and the IMF conducted their virtual conversations towards obtaining a loan through the Rapid Financing Instrument.

The financing line would provide a single disbursement for USD508 million, and the resources would go to the Central Government. Credit consideration by the IMF Board is scheduled for later this month.

“This program with the IMF is of fundamental importance for Costa Rica, not only for the resources it would provide to support public finances, but also for the support it represents to the country’s economic policies to respond to the consequences of the pandemic, to strengthen macroeconomic stability, ensure the sustainability of public debt, and boost medium and long-term economic growth, ”said the President of the Central Bank, Rodrigo Cubero.

The Rapid Financing Instrument is available to IMF member countries facing a balance of payments shock. The rapid disbursement mechanism is ideal for providing financial assistance in the face of the strong negative impact that the covid-19 pandemic is causing to the world economy. Precisely, this April 16, said international organization reported that more than 90 nations have requested this line of financing. The interest rate is 150 basis points over the IMF’s Special Drawing Rights (SDR) interest rate (which is currently 8 basis points), for a current total rate of 1.58% annually . The term of the loan is five years, with quarterly payments from 3¼ years of disbursement.

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