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 The funds are intended to maintain public finances. - Inter-American Development Bank photo - |
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Published on Monday, August 16, 2021
The Costa Rica government, through the Ministry of Finance, presented to Congress a plan for the approval of a new loan of $500 million each with the Inter-American Development Bank, IDB. The Inter-American Development Bank, founded in 1959, offers long-term loans to Latin American and Caribbean countries. According to the ministry, the new loan is split into two parts. The first $250 million would have a term of 20 years, with a grace period of 5 years and a repayment period of 15 years, with an annual interest rate based on Libor of approximately 1.19%. The other $250 million loan would be for a 7-year term, with a 3-year grace period and a 4-year repayment period, with an annual interest rate based on Libor of approximately 2.34%. The funds are intended to maintain public finances. "These are two loans with very favorable conditions, which allow the exchange of expensive debt for cheap debt," the ministry said in its statement. The change of debt, so-called cheap by expensive, could generate a saving of $156 million for the first loan and $38.5 million for the second, according to the ministry. This is because the interest paid on the current loans is more expensive compared to the interest that would be paid with new loans. The request for approval of these two new loans is under analysis in Congress. The deputies are expected to reject or approve the new loans in the next few days. The government received the first payment of approximately $249 million from the recently approved loan of $1.7 billion with the International Monetary Fund, as was confirmed by President Carlos Alvarado, during the ceremonial acts in celebration of the Virgen de Los Angeles Day on Aug. 2. ----------------------- How is requesting more loans a good strategy to improve the economy and reduce the fiscal deficit? We would like to know your thoughts on this story. Send your comments to news@amcostarica.com  Professional's
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