{
  "title": "IMF Executive Board Approves a 36-month US$ 1.778 Billion Extended Arrangement under the Extended Fund Facility for Costa Rica and Concludes 2021 Article IV Consultation",
  "publication": "IMF News, March 1, 2021",
  "sourceUrl": "https://www.imf.org/en/news/articles/2021/03/01/pr2153-costa-rica-imf-exec-board-approves-36-mo-ext-arr-eff-concludes-2021-art-iv-consultation",
  "canonical": "https://www.imf.org/en/news/articles/2021/03/01/pr2153-costa-rica-imf-exec-board-approves-36-mo-ext-arr-eff-concludes-2021-art-iv-consultation",
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  "summary": "The Executive Board approved a 36-month extended arrangement under the Extended Fund Facility (EFF) for Costa Rica with access equivalent to SDR 1.23749 billion (335 percent of quota, equivalent to US$1.778 billion).",
  "publishDate": "2021-03-01",
  "sections": [
    {
      "heading": "Program approval and financing",
      "content": "- The Executive Board approved a 36-month extended arrangement under the Extended Fund Facility (EFF) for Costa Rica with access equivalent to SDR 1.23749 billion (335 percent of quota, equivalent to US$1.778 billion).\n- The Board’s approval allows for an immediate disbursement equivalent to US$296.5 million.\n- The EFF arrangement follows Fund emergency support to Costa Rica in April 2020 (100 percent of quota, equivalent to US$521.7 million).\n- The arrangement is expected to catalyze additional bilateral and multilateral financial support.\n- The Executive Board also concluded the 2021 Article IV consultation with Costa Rica."
    },
    {
      "heading": "Economic outlook and effects of the pandemic",
      "content": "- The pandemic has hit the economy hard, exacerbating pre-existing vulnerabilities and undermining expected yields from the 2018 fiscal reform.\n- The recovery is expected to be protracted.\n- The Costa Rican economy is projected to grow by 2.6 percent in 2021.\n- Risks to the outlook remain elevated given the uncertainty surrounding the pandemic."
    },
    {
      "heading": "Program objectives and policy pillars",
      "content": "- The IMF-supported program aims to:\n  - support the recovery;\n  - secure macroeconomic stability; and\n  - advance the authorities’ home-grown reform agenda.\n- The authorities’ policy efforts under the program will be anchored by three key pillars:\n  - (i) gradually implementing equitable fiscal reforms to ensure debt sustainability, while protecting the most vulnerable;\n  - (ii) maintaining monetary and financial stability, while continuing to strengthen the central bank’s operational autonomy and governance and addressing structural financial vulnerabilities; and\n  - (iii) advancing key structural reforms to promote inclusive, green, and sustainable growth."
    },
    {
      "heading": "Key policy commitments and recommendations (from Mr. Mitsuhiro Furusawa, Deputy Managing Director, and Acting Chair)",
      "content": "- Fiscal policy and social protection:\n  - Authorities are committed to achieving a primary surplus by 2023 to place debt on a downward path.\n  - Continue to secure adequate pandemic-related spending for 2021 and critical social and capital spending over the medium term to support growth.\n  - Continued strengthening of social assistance programs and implementation of reforms envisaged under the Public Employment Bill to improve the equity and efficiency of government spending.\n  - Other fiscal structural reforms will support the authorities’ fiscal strategy and mitigate fiscal risks.\n- Monetary and financial stability:\n  - The monetary policy stance remains appropriately accommodative.\n  - Other monetary and financial sector measures have been transparent and well-targeted, providing timely support.\n  - Greater development of the foreign exchange market will support effective risk management and increased intermediation in local currency.\n  - Stepped-up monitoring and supervision will help ensure adequate bank capitalization.\n  - Continue strengthening the central bank’s operational autonomy and governance and address structural financial vulnerabilities.\n- Structural and macro‑structural reforms:\n  - Implementation of an ambitious macro‑structural agenda, including promoting innovation and digitalization and fostering greater female labor force participation, to help lift potential growth and address inequality.\n  - Costa Rica’s role in tackling climate change remains a key pillar: ongoing efforts on climate change mitigation and adaptation can generate new jobs and support sustainable and inclusive growth."
    },
    {
      "heading": "Additional context",
      "content": "- The IMF noted that the authorities’ prompt response and well-established universal healthcare system have helped avoid a deeper crisis.\n- The EFF builds on a broad-based dialogue and the 2018 fiscal reform.\n\nIMF Press Release No. 21/53, March 1, 2021\n\n---\n\n\n References\n\n- Mitsuhiro Furusawa\n- Costa Rica and the IMF\n- IMF Policy Advice -- A Factsheet\n- Press Releases\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2021/03/01/pr2153-costa-rica-imf-exec-board-approves-36-mo-ext-arr-eff-concludes-2021-art-iv-consultation"
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    "Published: March 1, 2021",
    "The Executive Board approved a 36-month extended arrangement under the Extended Fund Facility (EFF) for Costa Rica with access equivalent to SDR 1.23749 billion (335 percent of quota, equivalent to US$1.778 billion).",
    "The Board’s approval allows for an immediate disbursement equivalent to US$296.5 million.",
    "The EFF arrangement follows Fund emergency support to Costa Rica in April 2020 (100 percent of quota, equivalent to US$521.7 million).",
    "The arrangement is expected to catalyze additional bilateral and multilateral financial support.",
    "The Executive Board also concluded the 2021 Article IV consultation with Costa Rica.",
    "The pandemic has hit the economy hard, exacerbating pre-existing vulnerabilities and undermining expected yields from the 2018 fiscal reform.",
    "The recovery is expected to be protracted.",
    "The Costa Rican economy is projected to grow by 2.6 percent in 2021.",
    "Risks to the outlook remain elevated given the uncertainty surrounding the pandemic.",
    "The IMF-supported program aims to:",
    "The authorities’ policy efforts under the program will be anchored by three key pillars:",
    "Fiscal policy and social protection:",
    "Monetary and financial stability:",
    "Structural and macro‑structural reforms:",
    "The IMF noted that the authorities’ prompt response and well-established universal healthcare system have helped avoid a deeper crisis.",
    "The EFF builds on a broad-based dialogue and the 2018 fiscal reform.",
    "[Mitsuhiro Furusawa](http://www.imf.org/external/np/omd/bios/mf.htm)",
    "[Costa Rica and the IMF](http://www.imf.org/external/country/CRI/index.htm)",
    "[IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)",
    "[Press Releases](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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