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The International Monetary Fund (IMF) has already advanced an agreement with Costa Rica to disburse some 710 million dollars, with which the Central American country is betting on facing the impacts of climate changeplus other provisions agreed to boost its economy.
The IMF team concluded the evaluation meetings on Monday and closed the conditions of the agreement with the Central Bank of Costa Rica (BCCR), the private sector and other government agencies.
This first stage is equivalent to a prequalification, since the proposal goes to a vote to formalize the disbursements that will be “analyzed” by the Executive Board of the IMF in the coming weeks.
Costa Rica, like the rest of the countries in the region, will face “a slowdown in real GDP to 4.4% in 2022” in a context of moderation in global growth and “more rigid financial conditions.”
The IMF technicians in Washington with the BCCR teams project that inflation will have reached its maximum peak in the third quarter of this year and from there they hope that it will gradually “return to the BCCR goal by the end of 2024.”
The Presidential House of Costa Rica has celebrated the culmination of the round of meetings that began on September 20 and concluded on October 3, in a publication this afternoon on Twitter.
“The disbursement associated with this review of the SAF would be around 264 million, while the financial resources of the Resilience and Sustainability Service would reach an amount of approximately 710 million. Both must be approved by the Executive Board of the IMF,” said the government house.
While rising costs of living will continue to put pressure on the most vulnerable populations, “the economic outlook remains subject to significant downside risks.”
In the IMF’s opinion, Costa Rica has comfortably met “the fiscal targets set out in the program (…) and the authorities are well on their way to exceeding the primary balance target that had been set for the end of 2022, even though they provide greater support to the most vulnerable population to face the impact of growing inflationary pressures,” says the letter.
Point in favor for green agenda
The IMF technical team that worked on the agreement highlights that Costa Rica is also strengthened with its “ambitious climate change adaptation and mitigation agenda.”
Studies from different divisions of the United Nations (UN) have agreed that the Central American region is located in one of the stripes most vulnerable to the impact of global warming and that the negative effects are already beginning to be felt in the region.
The head of the IMF technical team for the agreement with Costa Rica, Manuela Goretti, quoted in the statement, highlighted that this country is the first member of the World Bank Group to formally request a financing line on the newly established resilience fund.
“The new service would support Costa Rica’s pioneering efforts to assess climate risks, decarbonize its economy, strengthen the resilience of its infrastructure, as well as green the reserves of the BCCR and the financial sector,” the expert pointed out.
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