Wednesday 23 June 2021

IMF Warns Costa Rica At Risk of Abrupt Financial Adjustment

Lorenzo Figliuoli, jefe de misión del FMI y el presidente del Banco Central,Olivier Castro se acomodaban ayer para la conferencia de prensa. El jeraca advirtió que el déficit fiscal sigue siendo muy grande. | JOHN DURÁN
Lorenzo Figliuoli (left), head of the IMF mission in Costa Ric and Olivier Castro, president of Central Bank prepare to sit down for a press conference. | Photo JOHN DURÁN, La Nacion

QCOSTARICA – The high fiscal deficit that is dragging Costa Rica could cause the international credit markets close their doors to the country, forcing a an abrupt financial adjustment, which would affect the weakest sectors.

So warns Figliouli Lorenzo, head of the International Montery Fund (IMF) mission visiting Costa Rica last week.

- Advertisement -

Figliouli said an immediate fiscal adjustment is needed as the goverenment’s debt reaches this year 5.9% of the GDP, and public sector debt reaches 60.4% of production.

According to IMF projections, the Costa Rican economy will grow a maximum of 3.5% in 2015. The IMF considers “unsustainable” the current trend, which will keep the fiscal deficit by at least 6% of GDP until 2019.

An article on Laprensalibre.com reports that “… Figliuoli explained that when the deficit is so large and public debt compared to production grows so fast and exceeds levels of 40% or 50%, the risks for the economy increase . ”

The La Nacion reported Figliuoli as saying, “under these conditions, fiscal adjustment if it is not well designed, if it is not done gradually, would have a negative impact on the economy and, especially in the weaker sectors of society, those who can least defend themselves when things go bad”.

- Advertisement -

The former miniter of finance, Francisco de Paula Gutiérrez, considered valid concerns of the IMF chief.

“I think we are not facing the problem as due. More than seeking out financing from China, we should be kicking the ball a little more, we should be negotiating with the various political groups to attack public spending and new taxes,” said de Paula Gutiérrez.

The former deputy minister of Finance, Edna Camacho, explained that when a country reaches a level of debt considered unsustainable, investors may lose confidence in government’s ability to pay.

“Unfortunately, this distrust is related to confidence in the colon and therefore there is a risk of a disorderly adjustment in the exchange market,” she said.

This morning the Central Bank (BBCR) dropped the basic passive rate (tasa básica pasiva) to 6.25%, the lowest since 1981.

- 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

Today’s Covid News: Average daily deaths from Covid-19 begins to decline

QCOSTARICA - The week of June 13 to 19 registered a...

Flight paralysis from Canada hits Costa Rica’s tourism

QCOSTARICA - The paralysis of flights from Canada last January hit...

MOST READ

Weather, friendly locals, cost of living: expats in Mexico, Costa Rica enjoy same things

EXPAT FOCUS (MND) Of course it was no surprise that readers of Mexico News Daily voted Mexico as the No. 1 expat destination in...

Week immersed in passage of tropical wave, June Solstice and Veranillo

QCOSTARICA - Today, Monday, June 21, is the day of the year when the sun stays the longest on the horizon, therefore it is...

The United States will distribute 55 million vaccines against Covid-19 in Latin America, Africa and Asia

QCOSTARICA - The United States presented on Monday a plan to share 55 million doses of coronavirus vaccines worldwide, with approximately 75% of the...

Nathalie Álvarez Mesén’s feature debut, Clara Sola, ready for the Cannes Directors’ Fortnight

Q ENTERTAINMENT (CINEUROPA) Nathalie Álvarez Mesén’s debut feature, Clara Sola, is ready to take part in this year’s Directors’ Fortnight at the Cannes Film...

Today’s Vehicle Restriction June 21: plates ending in 1 & 2 CANNOT circulate

Today, Monday, June 21, we are back to the two plates that cannot circulate, in today's case plates ending in 1 & 2 CANNOT...

Today’s Vehicle Restriction June 22: plates ending in 3 & 4 CANNOT circulate

Today, Tuesday, June 22, plates ending in 3 & 4 CANNOT circulate. The measure is countrywide and applied between 5:00 am and 9:00 pm, save...

Ortega government accuses imprisoned opponents of receiving money from the United States to overthrow him

TODAY NICARAGUA – The Nicaraguan government assures that the imprisoned political opponents detained on charges of “inciting foreign intervention” are “usurpers” financed by the...

OIJ investigation into road works corruption leads to inquiries in Panama

QCOSTARICA - The prestige of the company of some of the richest men in Costa Rica hangs by a thread. For many, the MECO...

Flight paralysis from Canada hits Costa Rica’s tourism

QCOSTARICA - The paralysis of flights from Canada last January hit Costa Rica's tourism sector, as Canada was the second source market for tourists...

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.