The deputy-manager of the International Monetary Fund (IMF), Naoyuki Shinohara, recommends Costa Rica move quickly to reduce its deficit. “The longer you wait, the more difficult it will be to make adjustments”, was the advice.
In 2010 the deficit of the non financial public sector in the country represented 5.5% of production in 2011 by 5% and this year is expected to be 4.6%.
The advice follows a meeting by Shinohara with presidenta Laura Chinchilla and the president of the Central Bank, Rodrigo Bolaños and Finance Minister Edgar Ayales, on Wednesday.
If greater efforts are not made, the economy may overheat and interest rates go up, the IMF tells the country’s managers.
The IMF manager recommends more flexibility in exchange rates is important to have more room for maneuver of monetary policy, but how and when depends on the authorities.
“We consider the current range that has been adopted as temporary, however, we do not know enough of the local economic outlook” Shinohara said.
