Costa Rica Receives IMF Approval for 500 Million After Economic Reforms

The IMF executive board has allowed for the disbursement over $500 million to Costa Rica after a successful review of the Central American country's reform programs, the organization said in a statement.

The approval of the economic reform program within the framework of the Extended Fund Facility (EFF) arrangement makes it possible to transfer approximately $272 million, bringing the total to $1.6 billion.

Another $243 million will come from the approval of the third review of the Resilience and Sustainability Facility (RSF) arrangement, the IMF said. The total under this agreement is about $730 million.

“Costa Rica is the first country to complete an RSF scheme,” which was launched to support poor or vulnerable countries in the face of long-term problems caused by global warming, the IMF said.

“The completion of the reviews marks the successful conclusion of an ambitious, multi-year, multi-dimensional reform program… that will help transform Costa Rica’s economy and advance the climate agenda,” IMF Deputy Managing Director Kenji Okamura said in a statement.

The IMF expects real GDP growth this year to be around 4 percent. “Growth has remained strong and inflation is rising towards the lower end of the central bank’s tolerance band,” Okamura said. “Formal employment, private sector wages, and poverty are all moving in the right direction.”

The IMF expects real GDP growth to be around 4 percent this year.

"Growth has remained strong and inflation is rising to the lower end of the central bank's tolerance range," Okamura said. "Formal employment, private sector wages, and poverty are all moving in the right direction."

Okamura recommended avoiding "legislative changes that erode revenue," adding that "the coverage of the fiscal rule should be maintained."

Growth accelerated to 5.1 percent in 2023 and is projected to remain robust at 4 percent in 2024. Inflation (year-on-year) has stayed negative since mid-2023, triggering Board Consultation under the Monetary Policy Consultation Clause. However, as base effects drop out of the year-on-year calculation, headline inflation is expected to return to the central bank’s tolerance band (2-4 percent) by late 2024. Formal employment, private-sector wages, and poverty are all moving in the right direction.