Tuesday 11 May 2021

Costa Rica to Issue US$4 billion in Foreign Markets

The opposition party, PLN, opposes issuance of the bonds

To avoid further pressure on local interest rates, the Ministry of Finance will be considering issuing US$1 billion a year in the international market over the next four years.

Costa Rica’s Minister of Finance Rocio Aguilar

Representatives from the Ministry of Finance confirmed that they are preparing an application to the Legislative Assembly to issue US$4 billion in debt securities in the international market.

- Advertisement -

Rocio Aguilar, Minister of Finance, explained to Bloomberg that ” … the Government has the objective of selling US$1 billion of Eurobonds annually over a period of four years. This transcended on Thursday afternoon when the aforementioned news agency published it in a note. “What we are thinking about is an umbrella authorization that covers several years. If we continue to use only the local market, we will continue to put pressure on local interest rates.'”

“… For international market analyst Douglas Montero, there is an appetite for emissions from Costa Rica in the foreign market. “In the case of Costa Rica, of course, there will be appetite, Costa Rica’s bonds are still traded, after the downgrades (reductions in ratings), after everyone knows that there is a fiscal deficit, that there are problems, that the reform is not being approved and that it will have to pass through legislative approval’.”

For the union of exporters, the announcement by the Ministry of Finance comes at a bad time. In a statement they said: “… From CADEXCO we were concerned to see the announcement made by the Ministry of Finance on Thursday to make a new issue of $4 billion over the next four years. For the export sector this announcement is surprising and worrying because, with the sole effect of announcing it, expectations of appreciation of the colon have been generated, negatively affecting the competitiveness of our exports.”

“… If this project is approved, we would be faced with an artificial excess supply of dollars that could lead to the colon appreciating, subtracting value from the income of the exporters. We believe that it is not appropriate for a sector that is generating employment and that contributes to Costa Rica’s economic growth, to have its performance negatively affected by this type of action.”

- Advertisement -

Costa Rica’s economy grew at a rate of 2.8% in April of this year and it moves away from the 3% average that had maintained in the last eight years.

For these reasons, Aguilar explained that it is necessary to go out to international markets to look for fresh resources to finance the obligations of the State after the approval of the fiscal reform, the Ley de Fortalecimiento de las Finanzas Públicas (Law Strengthening Public Finance) in the Legislative Assembly (Costa Rica’s Congress).

The last time the Legislative Assembly approved an indebtedness plan in international markets was in 2012, when it also placed US$4 million in four issues of US$1 billion per year.

The last issuance of these Eurobonds was placed in 2015 and since then the Government opted for internal indebtedness to obtain resources and finance its obligations. However, the growing fiscal deficit and the reduction in the growth rate of the economy make it increasingly difficult to obtain resources in the local market.

Costa Rica’s fiscal deficit will reach 7.1% of the Gross Domestic Product (GDP) at the end of 2018 and 7.9% at the end of next year, according to the projections of the Banco Central de Costa Rica(BCCR) – the Central Bank.

Source (in Spanish): El Financiero

- Advertisement -

- Advertisement -

FACT CHECK:
We strive for accuracy in its reports. But if you see something that doesn’t look right, send us an email. The Q reviews and updates its content regularly to ensure it’s accuracy.

Ricohttp://www.theqmedia.com
"Rico" is the crazy mind behind the Q media websites, a series of online magazines where everything is Q! In these times of new normal, stay at home. Stay safe. Stay healthy.

Related Articles

IMF-Backed Bill Sets Up Clash With Costa Rica’s Powerful Unions

(BLOOMBERG) Costa Rica is trying to rein in one of the...

Costa Rica Eurobonds Risk Rating Confirmed

Standard & Poor's has given a B+ rating to the US$1.5...

MOST READ

These are the new sanitary measures that will be applied in May

QCOSTARICA - At the press conference from Casa Presidencial that started more than 15 minutes this afternoon, the government announced new sanitary measures that...

Today’s Covid-19 News: New infections continue over 2K daily, despite drop in R rate

QCOSTARICA - The Covid-19 infection rate in Costa Rica dropped, but not enough to reduce the rate of infection. While the indicator stands at 1.32,...

Space tourism is here – 20 years after the first stellar tourist, Jeff Bezos’ Blue Origin plans to send civilians to space

For most people, getting to the stars is nothing more than a dream. But on May 5, 2021, the 60th anniversary of the first...

48 patients with covid-19 from other provinces wait for beds in San Jose hospitals

QCOSTARICA - 48 patients with covid-19, the majority in severe and moderate condition, this Thursday morning were waiting for a bed in a hospital...

“Ciudad Gobierno” would give a new face to capital with a gigantic complex of buildings

QCOSTARICA - With a mega-complex of more than 153,000 square meters (1.65 million square feet), comprised of 16 ministries would be located in eight...

Government does not plan to announce expansion of restrictive measures

QCOSTARICA - The Government of Carlos Alvarado confirmed on Friday that it does not plan to announce the expansion of the restrictive measures that...

Improvements begin at Quepos airport

QCOSTARICA - With the objective of boosting connectivity, regional tourism and the economic reactivation of the area, work started this Wednesday on the improvements...

The Economist Sees Ortega Clinging to Power

TODAY NICARAGUA (Confidencial) Six months before the general elections in Nicaragua, The Economist Intelligence Unit (EIU) predicts that the regime of Daniel Ortega and Rosario...

Seriously ill patients from covid-19 overflow Caja capacity

QCOSTARICA - The Caja Costarricense de Seguro Social (CCSS) says that its hospitalization figures for serious covid-19 patients are in the red. In a statement ...

WANT TO STAY UP TO DATE WITH THE LATEST!

Get our daily newsletter with the latest posts directly in your mailbox. Click on the subscribe and fill out the form. It's that simple!

Log In

Forgot password?

Forgot password?

Enter your account data and we will send you a link to reset your password.

Your password reset link appears to be invalid or expired.

Log in

Privacy Policy

Add to Collection

No Collections

Here you'll find all collections you've created before.