  According to the government, the loan is to finance this year's budget. - A.M. Costa Rica wire services photo - |
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 Published Tuesday, August 25, 2020 Congress
pre-approves $508 million
loan with IMF By the A.M. Costa Rica staff On Monday, congress approved the file No.22018, a government loan agreement with the International Monetary Fund, IMF, for $508 million. The loan will be used mostly to attend to the national emergency caused by covid-19, congress said in its statement. In addition, the loan will have a lower interest than the percentage currently paid by the government in international loans. According to the government, in the future budget adjustments, it would achieve a surplus of 2% of GDP in 2024. And a debit equivalent to 50% of GDP in 2034. According to Congressman Erwen Masís, who voted in favor of the loans, in theory this contract with the IMF is not new debt. It is a change from expensive loans to another with more favorable and cheaper conditions to ease the economic crisis before and after the pandemic. The loan will be received in a single tract by the IMF and deposited in the Central Bank of Costa Rica. The funds will then be transferred to the Ministry of Finance, where the goal is to finance government expenses, Congress said in its statement. $50 million will be transferred to Social Security, as partial payment for the debt that the government has with that organization, Congress said. It is expected that during this week, the final vote will be given for the approval or rejection of the loan with the IMF. In July, the government, through the Economic Council, requested that Congress approve the loan. According to the government, the loan is to finance this year's budget. The $500 million-plus loan was agreed at an interest rate of 1.55% per year. The term of five years includes quarterly payments from the third year of disbursement, the government said. "This loan is important in the effort that the government has followed to change expensive debt for cheaper debt, which helps throughout the process of fiscal consolidation," said Elian Villegas, Minister of Finance. "Furthermore, it is a sign of confidence of the IMF on the route taken by the government.” Costa Rica and the world face one of the biggest economic crises of the last century, as a result of the pandemic. "It is estimated that in 2020 the national economy will decrease by 3.6%, with a partial recovery of 2.3% in 2021," the government said in its statement. The planned loans for this year are predicted to be equivalent to 7.3% of G.D.P., according to the government. Of these, Congress has already approved loans equivalent to 3.6% of G.D.P. Other loans equivalent to 0.8% of G.D.P. have already been presented to Congress for its approval. And the list continues. More loans equivalent to 0.8% of G.D.P. will be presented to Congress in the coming weeks. Additionally, loans equivalent to 2% of G.D.P. are in the process of being negotiated with international banks. -------------------------- Is it a good strategy for the government to continue getting loans through international banks? We would like to know your thoughts on this story. Send your comments to news@amcostarica.com |
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