Wednesday 3 March 2021

It seems we haven’t hit bottom yet

Risk of investing in Costa Rica increases due to weak public finances, according to Moody’s international rating agency

QCOSTARICA – Employment would be affected by low investment levels, sales of goods and services would be weak, and a highly indebted government would need to spend more money than ever on debt repayment, this as interest rates rise in Costa Rica.

Investment and employment, as well as government debt, would worsen after expectations of an increase in interest rates

Meanwhile, current holders of the country’s bonds, as well as anyone who in the next few years becomes a pensioner, would see a decrease in the value of the payments they receive.

- Advertisement -

A rate hike is likely to be modest, as lending money to the Costa Rican government and local banks would remain an option for international markets, which have high levels of cash to invest.

But even a small increase in rates would mean that the worst is not yet over for a Costa Rican economy – characterized by historically high levels of debt in government finances.

Not much missing to hit bottom

An increase in interest rates is the likely result of an increase in the risk of investing in Costa Rica, evaluated earlier this month by Moody’s international rating agency.


  • Investors would be reluctant to start new businesses or expand existing ones, as the cost of money would increase.
- Advertisement -

Existing businesses

  • Existing businesses would experience slow growth, as consumers cannot pay high interest costs to buy the goods and services.


  • The economy would create few new jobs when investment growth is slow.


  • The capacity would decrease for the government to provide public services or make investments, as it would have to pay more for the money borrowed, either in the local market or for Eurobonds.

Private borrowers

  • Borrowers would pay more for loans.
  • Some people would not have access to loans, as they are considered bad credit risks by lenders in a high interest rate scenario

Current bond holders

  • A holder of the Costa Rican bonds would make less money than a buyer of new bonds, which offer a higher interest rate.
  • Or, you will lose a portion of the face value of your bond by having to sell it, since the interest it generates is less than that of a new bond.


  • Pressure would increase on the Disability, Old Age and Death regime to pay pensions, as taxpayers would have fewer resources in an economy with low income and employment.
  • Private pension schemes would have less money to pay for pensions, as the bonds would be worth less, once rates go up.
- Advertisement -

Government Lenders

  • Lenders would get a higher return on money loaned to the Government, while they run a greater risk of losing value through inflation (for loans in colones) or default (for loans in dollars), if the Government is unable to repay its debts.


  • The risk of investing in Costa Rican bonds has reached its lowest level (dropping to a B2 from B1) in modern history, according to the rating agency Moody’s Corporation; the lower the initial letter of the ranking – starting with “A” -, as well as the larger the figure – starting with “1”, the higher the perceived risk.

Source: La Republica

- Advertisement -

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.

"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

Tamarindo and Sámara received recognition for Tsunami preparedness

QCOSTARICA - For their preparedness to face tsunamis, the communities of...

Costa Rica Celebrates 200th This Year

QCOSTARICA - This year Costa Rica celebrates 200 years of independent...


97 labs test those who need to leave the country for covid-19 antigens

QCOSTARICA - Need to leave the country and require a test to detect SARS-CoV-2, the coronavirus that causes covid-19? The Cámara Costarricense de la Salud...

Nicaragua begins vaccination against covid-19 in people with chronic diseases

TODAY NICARAGUA – Nicaragua, on Tuesday, March 2,  began to apply the Russian Sputnik V vaccine against covid-19 to people with chronic diseases, in...

South Korea company to conduct Costa Rica rail feasibility study

QCOSTARICA - Korea National Railway (KR) will conduct a feasibility study for the restoration of 98.3km of Costa Rica’s San José-Puntarenas rail line. The study...

ESPH charges the family for electricity for January and February even though fire destroyed their home in December

QCOSTARICA - Despite losing their home entirely in December, a Heredia received electricity bills from the Heredia Public Service Company (ESPH) for January and...

There is no money to start the Costa Rican Space Agency

QCOSTARICA - Costa Rica President Carlos Alvarado assured that the State lacks the money to start the Costa Rican Space Agency (Agencia Espacial Costarricense...

US Latin America Policy Won’t Change Much, New ‘Thaw’ With Cuba Can’t be Ruled Out,

Q REPORTS - U.S. President Joe Biden is expected to outline his vision of Washington's Latin America policy at the next Summit of the...

Legislative Assembly officially inaugurated new building amid protests and disorder

QCOSTARICA - Costa Rica's Legislative Assembly officially inaugurated its new building this Wednesday, February 24, 2021,  five months after the legislative branch of government...

Don’t forget to move forward!

RICO's DIGET - As we begin the month of March, I can't help but think back on what we have been through over the...

CNE: 19 cantons maintain a high risk of contagion

QCOSTARICA - In total, 19 cantons in six provinces maintain a high risk of contagion by COVID-19, according to the last update from the...


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.