Costa Rica’s economic outlook improves

July 11, 2008

 

Citing the Costa Rican government´s declining debt burden, Standard & Poor´s Ratings Services (S&P), one of the big three credit rating agencies, raised its outlook on Costa Rican government debt to positive from stable, according to S&P.

Credit ratings measure the risk of default of particular debt issuers, in this case the Costa Rican government. Other thing being equal, the lower the risk an issuer will default on its debt obligations, the lower the interest rate it will need to pay to borrow from markets.

A positive outlook implies that economic conditions in the country are considered to be improving.

S&P affirmed its BB/B foreign currency and BB+/B local currency sovereign credit ratings for Costa Rica. The ratings agency affirmed the BB+ long-term debt rating on Costa Rica´s foreign currency senior unsecured debt reflecting both default and recovery prospects. These ratings imply Costa Rican debt is “speculative/somewhat speculative” and that an investment in Costa Rican debt is among the safest investments in debt that is investment-grade.

According to S&P, buoyant tax revenues and continued good GDP growth have contributed to a decline in gross general government debt to an expected 32 percent of GDP at the end of 2008, compared with 41 percent in 2006.

S&P also noted that the ongoing improvement in Costa Rica´s fiscal and debt profile, combined with more exchange rate flexibility and a more effective monetary policy, could reduce Costa Rica´s vulnerability to sudden external shocks, potentially improving creditworthiness.

 

You may be interested

Costa Rica at a glance: top news from the past week
The Alvarado Administration
94 views
The Alvarado Administration
94 views

Costa Rica at a glance: top news from the past week

The Tico Times - May 21, 2018

Newly inaugurated Costa Rican President Carlos Alvarado is closing in on two weeks on the job. Here are some of…

PHOTOS: International Museum Day in Costa Rica
Arts & Culture
109 views
Arts & Culture
109 views

PHOTOS: International Museum Day in Costa Rica

Mitzi Stark - May 21, 2018

May 18 is International Museum Day, and Costa Rica celebrated with 31 mini-museums all in one at the Casa del…

Costa Rica, Panama refuse to acknowledge Venezuelan election results
Latin America
141 views
Latin America
141 views

Costa Rica, Panama refuse to acknowledge Venezuelan election results

AFP - May 21, 2018

Costa Rica and Panama were two of 14 countries in the Americas to announce they would not acknowledge the results…