The International Monetary Fund (IMF) has made an additional $65 million available to Costa Rica, following a review of the terms of its standby loan, the IMF said in a statement.
The new money brings the total amount of IMF funds available to Costa Rica to $585 million, pursuant to an arrangement created in April that offers funding of as much as $735 million from which the country can draw as needed.
Following the meeting of the executive board, Murilo Portugal, the fund's deputy managing director and current chair, explained the reasoning for the increase in available funding.
“The 15-month standby arrangement is expected to remain precautionary and will continue to support confidence through the availability of a substantial liquidity buffer,” Portugal said. “The program has been revised to partly accommodate lower-than-expected fiscal revenues through higher deficits in 2009-10.”
According to the IMF, Costa Rica has done well to weather the effects of the global economic and financial crises, although, given declining manufacturing output and diminished revenues from exports and tourism, the funds are a necessary precautionary measure to ensure buoyancy for the slowed economy.
The review also found that the historical lows in the inflation rate that Costa Rica presently enjoys has allowed the Central Bank to achieve more lasting price stability and praised the bank's cautious policies regarding inflation and the exchange rate. The IMF also reported that Costa Rican banks are sound and that the repayment of loans continues to contribute to stability.
“Overall, the near-term prospects for Costa Rica's economy have improved and external vulnerabilities have declined,” Portugal said. “The incipient global recovery should boost confidence, help lift export-related activities, and restore investor risk appetite. Continued strong implementation of the policies under the IMF-supported program will help insulate Costa Rica's economic recovery from these downside risks.” |
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