The International Monetary Fund (IMF) has completed the country’s Extended Fund Facility (EFF) agreement, enabling a disbursement of funds. The IMF also confirmed the completion of the second review of Costa Rica’s Resilience and Sustainability Facility (RSF) arrangement.
Costa Rica became a member of the IMF on Jan. 8, 1946, and has since had 18 arrangements. The nation boasts a population of 5.279 million and is projected to see a 4.4% increase in real GDP, as well as a .7% increase in consumer prices by 2024.
Bo Li, Deputy Managing Director and Acting Chair of the Board for the IMF, praised Costa Rica's progress: "Costa Rica is reaping the benefits from its home-grown reform program. Strong implementation of the Fund-supported programs has enabled the country to restore confidence in the strength of its policy frameworks, withstand multiple external shocks, push forward key reforms, and achieve robust growth. Fiscal outturns have exceeded expectations, and the institutional framework for fiscal policy has been particularly valuable in achieving these results. Monetary policy has demonstrated its ability to react to inflation shocks and anchor expectations and reserves are adequate."
In their review, the executive directors suggested that the Central Bank of Costa Rica should adopt a neutral stance by 2024 and allow exchange rates to fluctuate freely. They encouraged fiscal responsibility alongside social assistance support, carefully crafted monetary policies to bolster economy, and structural reforms aimed at improvement and fostering a green transition.
Li further commented on ongoing efforts towards economic resilience: "There are ongoing efforts to make productivity gains more broad-based and to green the economy. The authorities should deepen their efforts to boost female labor force participation and integrate migrants into the formal labor market as part of their package of reforms to make growth more equitable. Efforts to increase digital connectivity, reduce electricity costs, improve educational outcomes will boost productivity throughout the economy. Building on progress on both climate adaptation and mitigation, reform measures to publish guidelines to assess the climate impact of public projects, introduce a vehicle feebate scheme, expand climate transition fiscal risk analysis, and better evaluate climate change-related credit risks are all important steps to make the Costa Rican economy greener and more resilient."