IMF Staff Country Reports

This paper presents Costa Rica’s Request for an Arrangement under the Flexible Credit Line (FCL). 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. The authorities are committed to maintaining their strong policies and frameworks. They are appropriately prioritizing further reducing public debt, enshrining central bank independence, and further strengthening financial supervision and crisis management. Costa Rica is vulnerable to the shifting external environment. In the context of increased external risks, the new FCL arrangement is expected to 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.