The International Monetary Fund (IMF) recently concluded its 2025 Article IV consultation with Costa Rica, conducted from February 18 to 28. The mission was led by Ding Ding, who provided insights into the country's economic performance and future prospects.
Costa Rica has been recognized as one of the fastest-growing economies in the Western Hemisphere, with GDP growth averaging above 5 percent since 2021. This growth has contributed to reducing poverty and unemployment while public debt has decreased by 8 percentage points of GDP to below 60 percent. These achievements are attributed to effective macroeconomic policies, reforms related to OECD membership, and a focus on exports and diversification.
Ding stated, "Growth is projected to remain strong at about 4 percent for 2025." Inflation trends are also promising, with headline inflation expected to reach the Central Bank of Costa Rica's (BCCR) target within a year. However, core inflation remains low, posing downside risks if expectations remain below target.
The IMF highlighted the importance of enhancing BCCR's autonomy and governance through legislative reforms. It also suggested allowing more flexible exchange rate adjustments and reducing reliance on foreign exchange interventions.
Further recommendations included strengthening financial sector oversight and resolving fiscal issues such as public debt management and social security disputes between Caja Costarricense de Seguro Social (CCSS) and the Ministry of Finance. Tax reforms were suggested to improve system fairness while raising resources for debt reduction.
Ding emphasized the need for supply-side reforms to sustain economic performance by addressing skill shortages and improving infrastructure quality. He noted that integrating climate considerations into investment decisions is already making infrastructure more resilient against natural disasters.
The IMF team expressed gratitude towards Costa Rican authorities for their cooperation during discussions.