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- The IMF approved today a two-year arrangement for Costa Rica under the Flexible Credit Line (FCL), for an amount of about US$1.5 billion (equivalent to 300 percent of quota).
- Costa Rica qualifies for the FCL by virtue of its very strong economic fundamentals and institutional policy frameworks, its track record of implementing very strong policies, and commitment to maintaining such policies in the future.
- The arrangement will enhance Costa Rica’s external buffers and provide insurance against external downside risks. The authorities intend to treat the arrangement as precautionary and would consider requesting reduced access in the future, risks permitting.
WASHINGTON, USA – The executive board of the International Monetary Fund (IMF) approved today a two-year arrangement for Costa Rica under the Flexible Credit Line (FCL) in an amount equivalent to SDR 1.1082 billion (about US$1.5 billion, equivalent to 300 percent of quota).
Costa Rica has maintained a close relationship with the Fund through surveillance, capacity development, and lending. The authorities sought Fund support through the Rapid Financing Instrument (in April 2020), an Extended Fund Facility (EFF) arrangement (approved on March 1, 2021, and completed on June 14, 2024), and a Resilience and Sustainability Facility (RSF) arrangement (approved on November 14, 2022 and completed on June 14, 2024).
The FCL is reserved for countries with very strong policy frameworks and track records in economic performance. Costa Rica’s very strong fundamentals and institutional policy frameworks, sustained track records of implementing very strong policies, and continued commitment to maintaining such policies in the future all justify the transition to an FCL arrangement. The arrangement is intended to send a very clear signal of the quality of the country’s very strong policies and institutional frameworks. Unlike the EFF arrangement, the FCL has no ex-post conditionality in which disbursements are subject to compliance with specific targets and reforms. Qualification is assessed regularly for countries wanting to maintain access.
The authorities plan to treat the arrangement as precautionary. The arrangement provides Costa Rica with upfront access to IMF resources in case needed if future external shocks materialize.
Following the executive board’s discussion on Costa Rica, Kenji Okamura, deputy managing director and acting chair, issued the following statement:
“Costa Rica has very strong economic fundamentals and institutional policy frameworks. An impressive reform track record has simultaneously spurred GDP growth, reduced public debt, and lowered poverty. The economic outlook remains favorable.
“The authorities are committed to maintaining their very strong policies and frameworks. They are appropriately prioritizing further reducing public debt, enshrining central bank independence, and further strengthening financial supervision and crisis management.
“Nonetheless, Costa Rica is vulnerable to the shifting external environment. In the context of increased external risks, the new Flexible Credit Line (FCL) arrangement will provide valuable insurance. Downside risks include a prolonged increase in global uncertainty, slower growth in major trading partners, tighter global financial conditions, and higher oil prices.
“The authorities intend to treat the FCL arrangement as precautionary and would consider requesting reduced access in the future if external risks were to decline.”
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