## 1criea2023006

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---

### r* (Neutral Real Interest Rate) and g* (Long-Run Growth Rate)
- Toolkit of multiple methods (semi-structural and univariate) produces estimates concentrated close to 1 percent for Costa Rica’s real natural rate of interest (r*).
- Given modelling and estimation uncertainties, current r* likely falls within the range of 0 to 3 percent.
- Underlying estimates of the real potential growth rate (g*) suggest a range between 3 percent and 4 percent.
- Key quantitative findings:
  - Semi-structural and univariate methods reaffirm a current point estimate for r* of close to 1 percent.
  - Univariate approach implies a neutral rate close to 0 percent for the past decade, following a steeper fall during the late 1990s and early 2000s.
  - Observed ex ante real interest rate: 5.6 percent in 2023 Q2.
  - The observed ex ante real interest rate at 5.6 percent in 2023 Q2 is around 4.6 percentage points above the neutral level implied by these estimates, indicating a heavily restrictive monetary stance.
  - Historical estimates cited:
    - around 3.5 percent in 2012 (Magud and Tsounta, 2012);
    - 1.4 percent at the end of 2015 (Munoz-Salas and Rodriguez-Vargas, 2017);
    - 1.9 percent at the end of 2016 (IMF, 2016);
    - around 1.5 percent in 2020 (Segura-Rodriguez, forthcoming 2023).
  - Potential GDP growth rate estimates stable between 3 percent and 4 percent over past three decades.
  - Current GDP growth appears somewhat above this longer-term potential rate.
- Methods and model features:
  - Semi-structural estimates extend Laubach and Williams (2003) to account for tight connection to the US economy, international spillovers, and Costa Rica’s special trade zones.
  - Univariate methods filter the observed ex ante real interest rate using only the time-series dynamics.
  - Joint estimation of r* and g* in semi-structural models provides consistent potential growth estimates.
- Cross-country comparisons:
  - Costa Rica’s univariate estimates of r* lie between the U.S. and the largest regional peers.
  - Brazil and Mexico: neutral rates above 2 percent.
  - Dominican Republic and Peru: neutral rates between 0 and 2 percent.
  - Interest rate differential (wedge) between market and policy rates has varied between 2pp and 4pp over the past decade and can widen gaps between r* and g* estimates.
- Monetary policy implication:
  - With observed ex ante real interest rate at 5.6 percent in 2023 Q2 and r* near 1 percent (or within 0–3 percent), current monetary policy is assessed as restrictive.
  - Stability of r* close to 1 percent over the past decade follows a secular decline from rates closer to 3 percent in the late 1990s and early 2000s.
  - Stable long-run potential growth rate between 3 percent and 4 percent implies limited upward revisions to growth assumptions underlying monetary policy.

### Nicaraguan migrants and refugees: demographics, labor market, and welfare
- Share and demographic profile:
  - Nicaraguan migrants and refugees represent 82 percent of Costa Rica’s foreign-born population.
  - Nicaraguans are younger on average than nationals.
  - Education: 63 percent of those aged 18-35 have incomplete secondary school, compared to 33 percent for natives.
- Labor force participation, unemployment, and earnings:
  - Higher labor force participation rate for Nicaraguans relative to nationals.
  - Similar unemployment rates to nationals.
  - Wage earnings: Nicaraguans’ wage earnings average 36 percent less than nationals; 10 percent less for low-skilled workers.
  - Poverty rates:
    - Nicaraguans: 32 percent living in poverty; 9 percent living in extreme poverty.
    - Costa Ricans: 25 percent living in poverty; 7 percent living in extreme poverty.
- Sectoral employment and informality:
  - Five activities—agriculture, construction, accommodation, commerce, and housekeeping—account for 71 percent of Nicaraguan jobs (43 percent for nationals).
  - Informality: 55 percent of Nicaraguan workers hold informal jobs; nationals: 42 percent.
  - Urban: 30 percent of Nicaraguan men work in construction.
  - Rural: 56 percent of Nicaraguan workers work in agriculture; 24 percent of rural Nicaraguan women work in accommodation.
  - Nationwide: 34 percent of Nicaraguan women work in paid-domestic jobs.
- Labor market complementarities:
  - Complementarity stronger than substitution, notably between high-skilled Costa Rican women and low-skilled Nicaraguan women.
  - Evidence from Blyde (2020), Oviedo (2022), Barahona (2022), Engler and others (2023), Alesina and others (2016), and PEN (2021): limited adverse impacts on natives’ aggregate employment and wages.

### Legal status, regularization, and barriers to formalization
- Legal and administrative barriers:
  - Recent laws added restrictions to regularize asylum seekers (Decrees 43810-MGP and 43809-MGP added restrictions in 2022).
  - Lack of information about regularization processes, including among migration officers.
  - Long backlogs and inadequate registries, personnel, and digital infrastructure to exchange information across agencies.
- Cost and duration of legal pathways:
  - Asylum seekers: require up to ten years to obtain permanent resident status and pay around US$70 to renew their annual work permit.
  - Special temporary work authorization: valid for two years and renewable, costs around US$95 (Decree Nº 43809 MGP, December 2022).
- Consequence: Informal employment often the only short-term option for many Nicaraguans.

### Case study — Seasonal coffee workers and health insurance
- Costa Rica’s share of regional coffee production: 8 percent (Honduras 32 percent; Mexico 21 percent).
- Seasonal worker inflows (2020-21 harvest): 6,087 workers from Panama and 4,469 from Nicaragua.
- Composition of coffee harvest workforce: about 40 percent from Nicaragua, 40 percent from Costa Rica, and 20 percent from the Ngöbe Buglé population of Panama.
- CCSS health-insurance regulation for seasonal coffee workers approved on August 30, 2018; program started in the 2020-21 harvest.
- Benefits and financing:
  - Provides comprehensive health services and cash benefits (disability compensation, maternity leave, subsidies, financial assistance for disability, leave, or funeral expenses).
  - Cost of the health insurance scheme is 15 percent of the gross wage.
  - ICAFE covers 5.75 percent through FONASCAFE; the government provides the remaining 9.25 percent.
  - No employee contribution under this scheme.
  - Program creates entry/exit protocol and coordinates transport.
  - 2021 subsidy totaled CRC245 million (0.0005 percent of GDP).
  - October 2023: INS, ICAFE, and the Ministry of Agriculture launched a new occupational risk insurance policy financed by FONASCAFE.

### Macroeconomic impact: output, fiscal, labor-force, demographic and social-security effects
- Output and growth:
  - Foreign-born workers directly contributed about 6.5 percent of Costa Rica’s GDP on average during 2017-21.
  - This contribution is above the average for emerging and developing economies (1.2 percent of GDP) and aligned with the average for advanced countries (6.9 percent of GDP).
  - Other studies report migrants’ contribution to Costa Rica’s GDP between 9.3 and 12 percent.
  - Growth accounting: non-native employment could have directly lifted GDP growth from 2.2 to 2.4 percent during 2017-21.
  - Foreign-born workers represented about 11 percent of total employment in Costa Rica during 2017-21; survey data may undercount seasonal and high-income foreign-born workers.
- Fiscal impact (General Government, percent of GDP; averages during 2017-21):
  - Net fiscal impact of the foreign-born population: positive, averaging 0.5 percent of GDP.
  - Social security contributions and tax revenue: around 1.1 percent of GDP (social security contributions main source at 0.9 percent of GDP).
  - Costs of health, education, social transfers, housing, and pensions: about 0.6 percent of GDP (health and education main outlays averaging 0.5 percent of GDP).
  - Among foreign-born population, Nicaraguans’ net fiscal contribution: positive at 0.1 percent of GDP.
  - Nicaraguans obtain 72 percent of public services and welfare programs among foreign-born population, but high informality and low wages limit their social security and tax contributions.
- Demographics and social-security sustainability:
  - Working-age population share projected to start declining in 2024, putting downward pressure on growth.
  - Dependency ratio (people aged 65 and over relative to working-age population) expected to double during 2022-50.
  - Migrant and refugee flows, with younger age structure, would sustain a net increase in the working-age population for longer.
  - Labor market participation rate (2021, OECD 2022): non-natives aged 18-65: 76 percent; natives: 68 percent.
  - Reserves of main public pension pillar (IVM) expected to be fully depleted by 2035.
  - Public health spending projected to rise by two percentage points of GDP relative to current levels by that time.
  - Migrants increased participation in the non-contributory pension system (RNC) from 0.6 to 6.9 percent from 2017 to 2022; nationals still account for more than 90 percent of participants.
  - Noncompliance with labor rights among migrants exceeds that of nationals by more than 60 percent.
  - Once enrolled, foreign-born employees’ social security contributions exceed the health, pensions, welfare, and housing benefits they receive.

### Remittances and current-account considerations — key statistics
- Outward personal remittances averaged 0.6 percent of GDP, with 78 percent sent to Nicaragua.
- Remittance flows (Millions of US$; and Percent of GDP)
  - Inward remittances (Millions of US$):
    - 2017: 527
    - 2018: 499
    - 2019: 519
    - 2020: 495
    - 2021: 559
    - 2022: 563
  - Inward remittances percent of GDP:
    - 2017: 0.9
    - 2018: 0.8
    - 2019: 0.8
    - 2020: 0.8
    - 2021: 0.9
    - 2022: 0.8
  - Outward remittances (Millions of US$):
    - 2017: 335
    - 2018: 364
    - 2019: 380
    - 2020: 350
    - 2021: 388
    - 2022: 417
  - Outward remittances percent of GDP:
    - 2017: 0.6
    - 2018: 0.6
    - 2019: 0.6
    - 2020: 0.6
    - 2021: 0.6
    - 2022: 0.6
  - Outward remittances sent to Nicaragua (Millions of US$):
    - 2017: 263
    - 2018: 286
    - 2019: 294
    - 2020: 271
    - 2021: 300
    - 2022: 323
  - Outward remittances to Nicaragua percent of GDP:
    - 2017: 0.44
    - 2018: 0.46
    - 2019: 0.46
    - 2020: 0.43
    - 2021: 0.46
    - 2022: 0.47
  - Net remittances (Millions of US$):
    - 2017: 192
    - 2018: 135
    - 2019: 139
    - 2020: 145
    - 2021: 171
    - 2022: 146
  - Net remittances percent of GDP:
    - 2017: 0.3
    - 2018: 0.2
    - 2019: 0.2
    - 2020: 0.2
    - 2021: 0.3
    - 2022: 0.2
- In 2022, Nicaraguans’ average monthly salary in Costa Rica: about CRC356,000 (US$596).
- Remittance profile context:
  - Costa Rica’s inward remittances larger than Chile (0.2 percent of GDP) and similar to Latin American average (0.6 percent of GDP).
  - Although 69 percent of Nicaraguans in Costa Rica declared sending remittances, low salaries limit overall capital outflows.
  - Remittance inflows exceeded outflows by 0.2 percent of GDP during 2017-22.
  - Costa Rica was the second largest remittance sender to Nicaragua in 2022 after the United States (Central Bank of Nicaragua).

### Policy conclusions and recommendations
- Net contributions and complementarities:
  - Foreign-born population contribution has been positive: they boost output, investment, and revenue collection.
  - Foreign-born workers in the formal job market more than offset fiscal cost of services and welfare transfers with social security contributions and taxes.
  - Foreign-born workers are younger than natives, helping mitigate population aging.
  - Evidence suggests Nicaraguan workers complement higher-skilled native workers, with low substitution effects among low-skilled workers.
  - Native workers’ skills have been increasing over time, potentially reinforcing future complementarities.
- Policy implications emphasized:
  - Address constraints to transition from informality to formality: improve legal regularization, administrative capacity, and information to increase social security contributions and reduce long-term pressures on pension and health systems.
  - Strengthen enforcement of migrants’ labor rights (minimum wage, social security enrollment) to improve fiscal sustainability and reduce old-age poverty risk for migrants.
  - Continue programs that expand access to social protection for seasonal and temporary workers (example: coffee-harvester health insurance and occupational risk insurance).
- Strengthening government capacity and regional coordination:
  - Simplify procedures, improve migration digital systems, enhance coordination and information sharing across agencies, and hire additional staff to reduce costs and processing times for legal migratory status.
  - Establish a coordination office within government to bring together stakeholders involved in migration for effective policy coordination.
  - Continue participation in regional platforms such as the Declaration of Los Angeles and the Comprehensive Regional Framework for Protection and Solutions (MIRSP).
- Role of development partners and financing:
  - Development partners to assist foreign-born populations’ access to services and provide targeted technical assistance to host communities.
  - Coordination among development partners, donors, and government to tailor support to specific foreign-born groups’ needs.
  - Financial and programmatic support cited:
    - US$20 million IDB donation to prevent violence against migrants, support integration, and strengthen institutional capacity.
    - UNHCR assistance to Nicaraguans and Venezuelans to apply for refugee status and programs for integration (training, grants, cash transfers, insurance).
    - US$20 million GCFF-World Bank concessional facility to increase access to key services and climate-resilient infrastructure in vulnerable areas.

*Prepared by Daniel Wales. Source: (Wales, 2023).*

### 1. Estimates of Costa Rica’s Neutral Real Interest Rate, r*, and Long Run Growth, Rate

### 1. Estimates of Costa Rica’s Neutral Real Interest Rate, r*, and Long Run Growth, Rate g*

### Overview
- A toolkit of multiple methods (semi-structural and univariate) produces estimates of Costa Rica’s real natural rate of interest (r*) concentrated close to 1 percent.
- Given modelling and estimation uncertainties, the current real natural interest rate likely falls within the range of 0 to 3 percent.
- Underlying estimates of the real potential growth rate (g*) suggest a range between 3 percent and 4 percent.

### Key quantitative findings
- Semi-structural and univariate methods reaffirm a current point estimate for r* of close to 1 percent.
- Univariate approach implies a neutral rate close to 0 percent for the past decade, following a steeper fall during the late 1990s and early 2000s.
- The observed ex ante real interest rate is 5.6 percent in 2023 Q2.
- The observed ex ante real interest rate at 5.6 percent in 2023 Q2 is around 4.6 percentage points above the neutral level implied by these estimates, indicating a heavily restrictive monetary stance.
- Historical estimates cited:
  - around 3.5 percent in 2012 (Magud and Tsounta, 2012);
  - 1.4 percent at the end of 2015 (Munoz-Salas and Rodriguez-Vargas, 2017);
  - 1.9 percent at the end of 2016 (IMF, 2016);
  - around 1.5 percent in 2020 (Segura-Rodriguez, forthcoming 2023).
- Potential (natural) GDP growth rate estimates have been remarkably stable over the past three decades between 3 percent and 4 percent.
- Current GDP growth appears somewhat above this longer-term potential rate.

### Methods and model features
- Semi-structural estimates extend the canonical Laubach and Williams (2003) framework to account for:
  - the tight connection to the US economy and international spillovers of the neutral monetary stance;
  - the structure of the Costa Rican economy, increasingly dependent on activity within the special trade zones.
- A suite of univariate methods filters the observed ex ante real interest rate using only the dynamic univariate properties of the time series.
- Despite differing model structures, underlying estimates for r* do not vary widely across methods.
- Joint estimation of r* and g* in semi-structural models provides consistent potential growth estimates.

### Cross-country and regional comparisons
- Costa Rica’s univariate estimates of r* lie between the U.S. and the largest regional peers.
- Large regional peers Brazil and Mexico currently appear to have neutral rates above 2 percent.
- The Dominican Republic and Peru suggest neutral rates between 0 and 2 percent.
- One potential explanation for differences relative to large regional peers is the interest rate differential (wedge) between market and policy interest rates, which has varied between 2pp and 4pp over the past decade and can widen the gap between estimates of r* and g*.

### Implications for monetary policy
- With the observed ex ante real interest rate at 5.6 percent in 2023 Q2 and r* near 1 percent (or within 0–3 percent), current monetary policy is assessed as restrictive.
- Stability of r* close to 1 percent over the past decade suggests long-run neutral conditions have been relatively constant after a secular decline from rates closer to 3 percent in the late 1990s and early 2000s.
- The stable long-run potential growth rate between 3 percent and 4 percent implies limited upward revisions to growth assumptions underlying monetary policy.

*Prepared by Daniel Wales. Source: (Wales, 2023).*

### 2.      Nicaraguan migrants and refugees represent 82 percent of Costa Rica’s foreign-born

### 2.      Nicaraguan migrants and refugees represent 82 percent of Costa Rica’s foreign-born population

### Demographic and labor-market profile
- Nicaraguan migrants and refugees represent 82 percent of Costa Rica’s foreign-born population.
- Age and education
  - Nicaraguans are younger on average than nationals.
  - 63 percent of those aged 18-35 have incomplete secondary school, compared to 33 percent for natives.
- Labor force participation and unemployment
  - Higher participation rate in the labor market for Nicaraguans relative to nationals.
  - They face similar unemployment rates to nationals (see Figure 1, left).
- Earnings and poverty
  - Nicaraguans’ wage earnings average 36 percent less than nationals, and 10 percent less for low-skilled workers (Figure 1, right).
  - Poverty and extreme poverty rates:
    - Nicaraguans: 32 percent living in poverty; 9 percent living in extreme poverty.
    - Costa Ricans: 25 percent living in poverty; 7 percent living in extreme poverty.

### Sectoral employment and informality
- Five activities—agriculture, construction, accommodation, commerce, and housekeeping—account for 71 percent of Nicaraguan jobs (43 percent for nationals).
- Informality
  - 55 percent of Nicaraguan workers hold informal jobs, exceeding the share for nationals (42 percent).
  - In urban areas, 30 percent of Nicaraguan men work in construction.
  - In rural areas, 56 percent of Nicaraguan workers work in agriculture; 24 percent of rural Nicaraguan women work in accommodation.
  - Nationwide, 34 percent of Nicaraguan women work in paid-domestic jobs.

### Labor market complementarities and substitution
- Evidence indicates labor complementarity is stronger than substitution, particularly:
  - High-skilled Costa Rican women and low-skilled Nicaraguan women complement each other in earnings and employment.
  - As Nicaraguan women take on housekeeping and care jobs, higher-skilled Costa Rican women can increase labor market participation.
- Studies cited:
  - Blyde (2020), Oviedo (2022), Barahona (2022), Engler and others (2023), Alesina and others (2016), and PEN (2021) document complementarities and limited adverse impacts on natives’ aggregate employment and wages.

### Legal status, regularization, and barriers to formalization
- Many Nicaraguans are unable to work legally in Costa Rica due to:
  - Recent laws adding restrictions to regularize asylum seekers (Decrees 43810-MGP and 43809-MGP added restrictions in 2022).
  - Lack of information about regularization processes, including among migration officers.
  - Long backlogs in the migratory system and inadequate registries, personnel, and digital infrastructure to exchange information across governmental agencies.
- Cost and duration of legal pathways (as described)
  - Asylum seekers require up to ten years to obtain permanent resident status and pay around US$70 to renew their annual work permit.
  - A special temporary work authorization, valid for two years and renewable, costs around US$95 (Decree Nº 43809 MGP, December 2022).
- Consequence: Informal employment is often the only option for many Nicaraguans in the short term.

### Case study: Seasonal coffee workers and health insurance (Box 1)
- Costa Rica’s share of regional coffee production: 8 percent (Honduras 32 percent; Mexico 21 percent).
- Seasonal worker inflows (2020-21 harvest): 6,087 workers from Panama and 4,469 from Nicaragua.
- Composition of coffee harvest workforce: about 40 percent from Nicaragua, 40 percent from Costa Rica, and 20 percent from the Ngöbe Buglé population of Panama.
- CCSS health-insurance regulation for seasonal coffee workers approved on August 30, 2018; program started in the 2020-21 harvest.
- Benefits and financing of the coffee-harvester scheme
  - Provides comprehensive health services and cash benefits (disability compensation, maternity leave, subsidies, financial assistance for disability, leave, or funeral expenses).
  - Cost of the health insurance scheme is 15 percent of the gross wage.
  - The Coffee Institute (ICAFE) covers 5.75 percent through FONASCAFE; the government provides the remaining 9.25 percent.
  - Under this scheme there is no employee contribution.
  - The program creates an entry/exit protocol for migrant harvest workers and coordinates transport.
  - In 2021, the subsidy totaled CRC245 million (0.0005 percent of GDP).
  - In October 2023, INS, ICAFE, and the Ministry of Agriculture launched a new occupational risk insurance policy financed by FONASCAFE.

### Macroeconomic impact: output, fiscal, and labor-force effects
- Contribution to GDP and growth
  - Foreign-born workers directly contributed to about 6.5 percent of Costa Rica’s GDP on average during 2017-21.
  - This contribution is above the average for emerging and developing economies (1.2 percent of GDP) and aligned with the average for advanced countries (6.9 percent of GDP).
  - Other studies report migrants and refugees’ contribution to Costa Rica’s GDP between 9.3 and 12 percent.
  - A simple growth accounting exercise suggests non-native employment could have directly lifted Costa Rica’s GDP growth from 2.2 to 2.4 percent during 2017-21.
  - Note: foreign-born workers represented about 11 percent of total employment in Costa Rica during 2017-21; survey data may undercount seasonal and high-income foreign-born workers.
- Fiscal impact (General Government, percent of GDP; averages during 2017-21)
  - Net fiscal impact of the foreign-born population: positive, averaging 0.5 percent of GDP.
  - Social security contributions and tax revenue: around 1.1 percent of GDP (main source of fiscal revenue: social security contributions at 0.9 percent of GDP).
  - Costs of providing health, education, social transfers, housing, and pensions: about 0.6 percent of GDP (health and education are main fiscal outlays, averaging 0.5 percent of GDP).
  - Among the foreign-born population, Nicaraguans’ net fiscal contribution was positive at 0.1 percent of GDP.
  - Nicaraguans obtain 72 percent of public services and welfare programs among the foreign-born population, but high informality and low wages limit their social security and tax contributions.
  - Table 1 (presented in source) shows annual revenue and expenditure components (health and other social; pensions; VAT; income) with detailed year-by-year percent-of-GDP values for 2017-21.

### Demographics, aging, and social-security sustainability
- Demographic projections and labor supply
  - Costa Rica’s share of working-age population projected to start declining in 2024, putting downward pressure on growth.
  - The dependency ratio—people aged 65 and over relative to the working-age population—is expected to double during 2022-50.
  - Migrant and refugee flows, with their younger age structure, would sustain a net increase in the working-age population for longer.
  - Labor market participation rate (2021, OECD 2022): non-natives aged 18-65: 76 percent; natives: 68 percent.
- Social-security sustainability
  - Reserves of the main public pension pillar (IVM) are expected to be fully depleted by 2035.
  - Public health spending is projected to rise by two percentage points of GDP relative to current levels by that time.
  - Migrants have increased participation in the non-contributory pension system (RNC) from 0.6 to 6.9 percent from 2017 to 2022, though nationals still account for more than 90 percent of the system’s participants.
  - Noncompliance with labor rights (minimum wage, enrollment into social security) among migrants exceeds that of nationals by more than 60 percent.
  - Once enrolled, foreign-born employees’ social security contributions exceed the health, pensions, welfare, and housing benefits they receive.

### Remittances and current-account considerations
- Outward personal remittances averaged 0.6 percent of GDP, with 78 percent sent to Nicaragua.
- Costa Rica’s remittance profile:
  - Larger than Chile (0.2 percent of GDP with similar migrant share), similar to Latin American average (0.6 percent of GDP).
  - Although 69 percent of Nicaraguans in Costa Rica declared sending remittances, their low salaries limit overall capital outflows.
  - Remittance inflows exceeded outflows by 0.2 percent of GDP during 2017-22.
  - Costa Rica was the second largest remittance sender to Nicaragua in 2022 after the United States (Central Bank of Nicaragua).

### Concluding remarks and policy recommendations
- Net contributions and complementarities
  - The contribution of Costa Rica’s foreign-born population to the economy has been positive: they boost output, investment, and revenue collection.
  - Foreign-born workers in the formal job market more than offset the fiscal cost of services and welfare transfers they receive with social security contributions and taxes.
  - Foreign-born workers are younger than natives, helping mitigate population aging.
  - Evidence suggests Nicaraguan workers complement higher-skilled native workers, with low substitution effects among low-skilled workers.
  - Native workers’ skills have been increasing over time, potentially reinforcing future labor complementarities with non-native workers.
- Policy implications emphasized in the source
  - Address constraints to transition from labor informality to formality (legal regularization, administrative capacity, information) to increase social security contributions and reduce long-term pressures on the pension and health systems.
  - Strengthen enforcement of migrants’ labor rights (minimum wage, social security enrollment) to improve fiscal sustainability and reduce old-age poverty risk for migrants.
  - Continue programs that expand access to social protection for seasonal and temporary workers (example: coffee-harvester health insurance and occupational risk insurance).

*Source: INTERNATIONAL MONETARY FUND.*

### 11.      Government capacity should be strengthened to improve identification,

### Government capacity should be strengthened to improve identification, regularization, and formalization of migrants and refugees, and to enhance the design of public policies at national and regional levels.

### Strengthening government capacity and administrative processes
- Simplify procedures, improve migration digital systems, enhance coordination and information sharing across government agencies, and hire additional staff to reduce costs and processing times for foreigners to obtain legal migratory status.
- Establish a coordination office within the government to bring together all stakeholders involved in migration (for instance, as part of the government‘s efforts to prepare a national migration policy) to ensure effective policy coordination.

### Regional coordination and frameworks
- Continue government participation in regional platforms, such as the Declaration of Los Angeles and the Comprehensive Regional Framework for Protection and Solutions (MIRSP), to better articulate migration policies in Costa Rica and the region.

### Redesign of public services to accommodate migrants and refugees
- Redesign parameters of key public services, such as social security and education, to accommodate harmonically a larger number of beneficiaries entering the social security and public education systems while accounting for migrants and refugees’ needs.
- Simplify access to housing and financial services to facilitate migrants’ economic and social integration.

### Role of development partners and international cooperation
- Development partners should continue assisting foreign-born populations' access to key services and infrastructure and provide targeted technical assistance to host communities.
- Coordination among development partners, donors, and the government is important to better tailor support to specific foreign-born groups’ needs (for example, migrants and asylum seekers in transit need more humanitarian assistance than permanent migrants and refugees, who mostly require inclusion programs).

### Targeted programs and illustrative example
- Expanding targeted programs, such as the program for seasonal coffee harvest workers, can foster migrants’ economic integration and benefit economic activity.
  - The seasonal workers program provides health insurance for seasonal workers, increasing workers’ participation in the social security system at a relatively low fiscal cost.
  - The program boosts production by facilitating workers’ access to productive sectors and positions Costa Rica as a fair and responsible trader in international markets.
  - The example highlights gains from coordinating and expanding policies among migrants, private sector, development partners and the government.

### Financial and programmatic support cited
- A recently approved US$20 million IDB donation aims to prevent violence against migrants, support their integration into hosting communities, and strengthen the government’s institutional capacity to manage migration flows.
- UNHCR is assisting Nicaraguans and Venezuelans already in Costa Rica to apply for refugee status in various countries, including the United States. Other UNHCR programs focus on integrating refugees through training, grants, cash transfers, and insurance coverage.
- A US$20 million GCFF-World Bank concessional facility aims to increase access to key services and climate-resilient infrastructure in areas with vulnerable communities, including refugees, asylum seekers, and migrants.

### Key statistics — Costa Rica: Remittances (Millions of US$; and Percent of GDP)
- Inward remittances:
  - 2017: 527
  - 2018: 499
  - 2019: 519
  - 2020: 495
  - 2021: 559
  - 2022: 563
- Inward remittances percent of GDP:
  - 2017: 0.9
  - 2018: 0.8
  - 2019: 0.8
  - 2020: 0.8
  - 2021: 0.9
  - 2022: 0.8
- Outward remittances:
  - 2017: 335
  - 2018: 364
  - 2019: 380
  - 2020: 350
  - 2021: 388
  - 2022: 417
- Outward remittances percent of GDP:
  - 2017: 0.6
  - 2018: 0.6
  - 2019: 0.6
  - 2020: 0.6
  - 2021: 0.6
  - 2022: 0.6
- Outward remittances sent to Nicaragua (o/w sent to Nicaragua):
  - 2017: 263
  - 2018: 286
  - 2019: 294
  - 2020: 271
  - 2021: 300
  - 2022: 323
- Outward remittances to Nicaragua percent of GDP:
  - 2017: 0.44
  - 2018: 0.46
  - 2019: 0.46
  - 2020: 0.43
  - 2021: 0.46
  - 2022: 0.47
- Net remittances:
  - 2017: 192
  - 2018: 135
  - 2019: 139
  - 2020: 145
  - 2021: 171
  - 2022: 146
- Net remittances percent of GDP:
  - 2017: 0.3
  - 2018: 0.2
  - 2019: 0.2
  - 2020: 0.2
  - 2021: 0.3
  - 2022: 0.2

### Additional contextual figures
- In 2022, Nicaraguans’ average monthly salary in Costa Rica was about CRC356,000 (US$596).

*Source: IMF staff summary of content from 1criea2023006 - 11. Government capacity should be strengthened to improve identification, regularization, and formalization of migrants and refugees, and to enhance the design of public policies at national and regional levels.*

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_Source: https://www.imf.org/-/media/files/publications/cr/2023/english/1criea2023006.pdf_