Press Release No. 08/318

Press Release: Statement by IMF Managing Director Dominique Strauss-Kahn at the Conclusion of his Visit to Costa Rica

December 11, 2008

Mr. Dominique Strauss-Kahn, Managing Director of the International Monetary Fund (IMF), issued the following statement today in San José at the conclusion of his visit to Costa Rica:

"It has been a pleasure to visit Costa Rica during my first official tour to Central America. This visit takes place in the context of extremely difficult global conditions which will have an important impact on the economies of the region. The IMF has been actively engaged in promoting a comprehensive policy and in adapting Fund operations to meet the needs of all members."

"During my stay in Costa Rica, I had the privilege of meeting with President Oscar Arias, Central Bank President Francisco de Paula Gutiérrez, Minister of Finance Guillermo Zúñiga, and representatives from academia and the private sector.

"Our discussions focused on the challenging external environment and how macroeconomic policies should respond to the evolving economic realities. Costa Rica is now feeling the impact of the U.S. slowdown: export demand is weakening, liquidity conditions have tightened, and some indicators of real activity show a marked slowdown.

"There was broad agreement on the need to respond to the expected pressures with a mix of domestic adjustment and external financing to help cushion the impact of the downturn on the economy and the people of Costa Rica. In this regard, the country can confront the challenging global environment from a position of relative strength. The prudent fiscal stance of recent years provides the authorities with some room for maneuver. Monetary policy will have to be vigilant to achieve a smooth adjustment in domestic demand and the current account deficit, maintain the attractiveness of local currency assets, and ensure that inflation expectations converge toward the central bank's inflation target.

"The authorities have taken a number of welcome steps to increase the resilience of the economy and the financial sector, including securing new official financing, strengthening central bank instruments and the liquidity support framework, and taking steps to recapitalize public banks.

"The IMF remains committed to assist Costa Rica and the other countries in the region to manage the challenges posed by the current global environment."