Costa Rica pushes fiscal reforms to promote growth with support from IDB

May 10, 2021

Costa Rica will press ahead with its structural fiscal reforms program aimed at boosting fiscal management efficiency and equity and promoting sustainable economic recovery with two loans totaling $500 million approved by the Inter-American Development Bank (IDB).

The operations will provide budget support to the country and support policy reforms to ensure fiscal sustainability and uphold short- and medium-term macroeconomic stability.

One of the loans includes contingency measures to raise sanitary emergency spending and assistance for households and businesses affected by the COVID-19 crisis. It also contemplates a structural increase in spending on social programs focused on the most vulnerable communities to reduce poverty and inequality, and moves to protect public investment in productive infrastructure.

The second loan provides support to structural reforms aimed at boosting the efficacy of the institutional macro-fiscal framework, increasing the efficiency and progressiveness of the tax system, and improving public spending effectiveness and equity. All these measures will contribute to strengthening public finances and fostering solid economic recovery in the post-pandemic stage.

The loans are for $250 million each, with an interest rate based on LIBOR. The first loan, which complements the economic program that the country has agreed with the International Monetary Fund, is for a 7-year term, with a 3-year grace period.

The second credit, under the programmatic policy-based loan modality, has a repayment term of 20 years, with a period of grace of 5.5-years.



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