Thursday 26 May 2022

Government fears “very drastic” consequences of not agreeing with the IMF

The message was broadcast on a national television channel in preparation for negotiations that would begin in October.

BusinessEconomic PolicyGovernment fears "very drastic" consequences of not agreeing with the IMF

The message was broadcast on a national television channel in preparation for negotiations that would begin in October.

(QCOSTARICA) The Government affirmed Tuesday night, on a national television broadcast, that the country could face “very drastic” consequences if the agreement with the International Monetary Fund (IMF) is not reached.

The Executive Power assured that the blow of the pandemic to the national economy caused a severe decrease in the State’s income to meet its obligations.

“To get an idea, in 2020, revenues fell ¢1.2 billion colones. That is four times the full budget of the Ministry of Public Works and Transportation (MOPT),” detailed the message read by a broadcaster while the data presented appeared on a blackboard.

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In addition, in the 2:31 minute video, the broadcaster declared that it is urgent to make decisions at this time, so that the same thing that does not happen as in the 80s, when an economic crisis occurred due to debt problems “product of not making difficult decisions on time.”

At that time, the video recalled, the dollar exchange multiplied by five – it went from ¢8 to ¢40 to one US dollar – the unemployment rate doubled and poverty reached 54%.

According to the Government, “the impact was much greater than that of any tax.”

“Costa Rica should not and cannot repeat this story. Although it requires difficult decisions, the good news is that avoiding a new crisis is possible, making responsible decisions with a balanced agreement to access IMF funds,” said the information.

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More videos on Costa Rica here.

What it says about the loan

The Executive maintains that the financing being negotiated with the IMF, for $1.750 billion, has favorable characteristics in terms of interest and payment term.

It also stresses that the approval of the proposal would send a signal to the markets that the country has a road to recovery.

“A series of decisions on spending and income with short-term effects are urgent to be able to access the loan and to quickly regain economic stability,” the broadcaster added.

The Plan to overcome the fiscal impact of the pandemic was presented to the public last Thursday, which includes cutbacks on government spending and a series of new taxes, including a tax on banking transactions and global income.

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"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.

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