China Buys More Costa Rican Debt

February 20, 2009

China recently bought $150 million in Costa Rican bonds, making good on a promise that enticed Costa Rica to cut diplomatic ties with Taiwan in 2007.

In exchange for diplomatic recognition, China pledged to buy $300 million in Costa Rican bonds, to be repaid over 12 years at 2 percent interest. China purchased the first $150 million in January 2008. By borrowing at such a low interest rate, Costa Rica saves ¢50 billion ($90 million) over 12 years, according to Finance Minister Guillermo Zúñiga.

Last year, when the Supreme Court forced Zúñiga to make the bonds purchase public against China’s wishes, Zúñiga suggested that China might not make the second purchase.

–Gillian Gillers

 

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