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The
approved amount for this
Eurobonos Law is $1.5 billion
in U.S. dollars or their
equivalent in any other
currency /
A.M. Costa Rica wire services
photo
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Deputies
approve Eurobonds bill
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By the
A.M. Costa Rica staff
The deputies of the Economic
Affairs Committee of the
Legislative Assembly unanimously
approved bill #21201 on Wednesday.
It is called the Authorization for
the Issuance of Securities in the
International Market and the
Agreement of Credit, known as the
Eurobonds Law.
According to the deputies, the
project authorizes the government,
through the Ministry of Finance,
to issue securities to be placed
on the international market to
convert internal debt into
external debt to cancel the
external debt to improve
conditions in terms of better
interest rates.
The approved amount for this
Eurobonos Law is $1.5 billion in
U.S. dollars or their equivalent
in any other currency, during the
year following approval of the
law.
To use this law, the Ministry of
Finance must submit the budget
support agreements negotiated with
the specific multilateral
financial organizations to the
deputies of the Legislative
Assembly.
According to the legislature, this
project becomes strategic because
it provides room for improvement
in portfolio risk management by
reducing concentration in
short-term and fixed-rate
securities, improving the risk
exposure of the portfolio.
Additionally, this project opens
up different possibilities for the
use of the new authorized
emissions.
The government may exchange,
consolidate, convert, renegotiate
or restructure any of the
country's debt still in
circulation in the national and
international markets, as well as
new issues authorized by this law,
"as long as it results in a
benefit for the country," said the
legislature in its statement.
With this law, the Ministry of
Finance has an instrument that
will allow it to diversify funding
sources, reduce the cost of
resources and significantly
improve the structure or
composition of public debt, thus
managing the risks associated with
the portfolio.
According to the deputy Luis Ramón
Carranza, "today more than ever we
are asking to the Government
Economic activation so that
resource in some way comes to
contribute with the issue of
employment and the issue of
economic reactivation ".
On March, as A.M. Costa Rica
reported, Minister of Finance,
Rocio Aguilar, met with the
deputies of the National
Liberation political party to
clarify their doubts and request
support for the bill presented
by the government.
The government requested that
the deputies of the Legislative
Assembly provide authorization
for the issuance of $6 billion
in Eurobonds.
The Eurobonds bill
allow the government to issue
bonds of $1,5 billion per year
in the first two years, plus $1
billion per year for following
next four years.
Minister Aguilar stated that
"the purpose of the Eurobonds is
that the country can capitalize
on a fiscal reform that took
many years and turn it into
opportunities with better
financing for economic
reactivation."
The meeting with the deputies of
the National Liberation Party
was the last of the meetings
held by Minister Aguilar with
all the parties of the
Legislature.
Minister Aguilar said that the
project to issue Eurobonds does
not mean more debts for the
government, only a renegotiation
of the part of the current
debts, "in much better
conditions, at rates much lower
than what we would be paying
here" (referring to local bonds
market).
According to
Minister Aguilar the main
advantage of the
renegotiation of debt with
Eurobonds is a reduction of
1.15 percent of GDP.
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Is using this new instrument to
negotiate better terms for the
national debt a positive move
for the government?
We would like to know your
thoughts on this story.
Send your comments to: news@amcostarica.com
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