The International Monetary Fund (IMF) Executive Board approved Costa Rica’s request for emergency financial assistance of about US$504 million to help the country meet the urgent needs stemming from the COVID-19 pandemic.
The funds will provide timely resources to support essential health expenditure and relief measures for the vulnerable populations, and to meet the urgent balance of payment need stemming from the pandemic.
The IMF says Costa Rica has taken extensive and important measures to contain the pandemic since early-March—including mandatory quarantines, closures of schools, public offices, and most public spaces, reduced work hours in the private sector, travel restrictions, and construction of a specialized hospital for Covid-19 treatment.
These necessary containment measures, coupled with the global economic downturn, are expected to take a major toll on the economy in the short term and cause a temporary deterioration in the country’s fiscal and external positions. It is estimated that the pandemic opened a balance of payments gap of about US$1.6 billion.
The IMF concluded its report saying, “To facilitate the recovery and counter future shocks, the (Costa Rican) authorities should maintain accommodative monetary policy and exchange rate flexibility and safeguard the stability of the financial system. Implementing a wide range of structural reforms underpinned by OECD accession would boost Costa Rica’s competitiveness and resilience to future shocks.”
