ICE reports loss due to income in colones and debt in dollars

Q COSTA RICA – Like many in Costa Rica whose income is in colones and debt in U.S. dollars, the state power and light company, the Instituto Costarricense de Electricidad (ICE), has been affected by the exchange rate policies of the Central Bank.

With the rise in the price of the dollar and the consequent payment of interest on its loans, ICE reports an accounting loss of ¢33.4 billion colones (US$58.6 million dollars) n the first quarter of the year.

The negative balance almost quadruples that reported ¢6.9 billion loss in the same period of 2016. The interannual increase between the two figures represents a variation of 380%.

The weakest quarterly performance was due to the cost of currency fluctuations (depreciation of the Costa Rica Colon against the American dollar), causing an increase in spending.

For example, in the first quarter of 2016, ICE made a debt payment of ¢5.8 billion, but this year the debt service payment increased to ¢ 24.3 billion (four times more) due to the exchange fluctuations.

On July 31, 2017, the Fitch Ratings issued a rating report on ICE, where it noted the company’s exposure to currency fluctuations due to the structure of its debt, affirming the national scale rating as ‘BB’ in local and foreign currency, with a Stable Outlook.

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