President-elect Chaves wants to ‘upgrade’ the IMF agreement

Costa Rica’s president-elect, Rodrigo Chaves, stated Monday, a day after being elected as the Central American country’s next president, that the country’s arrangement with the IMF will be improved.

He was alluding to a loan agreement negotiated between the International Monetary Fund (IMF) and the departing administration for more than $1.7 billion.

“The IMF does not provide resources for government finance. We regard it as a tool for instilling confidence in those who must lend us money (as proof) that Costa Rica will be able to repay its obligations “Chaves, a former World Bank officer for over 30 years, made the statement.

“The Fund needs to be thankful to us for more ambitious public policy actions in terms of economic recovery and budgetary prudence,” he added, in order for Costa Rica to be able to obtain funds from other entities.

“We are not going to loosen our commitment (to the IMF) to solid and prudent public finances,” he stated emphatically.

The IMF authorised the second tranche of $284 million called for in the deal reached on March 1, 2021, at the end of March, while providing Costa Rica extra time to implement the agreed-upon changes to lower its public deficit.

In order to minimise government spending, the IMF specifically requested the passage of a pension and public employment bill.

Costa Rica finished fiscal year 2021 with a deficit of 5.18 percent of GDP, down from 8.03 percent in the previous year. The national debt now exceeds $42.4 billion (over 70 percent of GDP).