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LatinNews Daily - 06 December 2018

In brief: Costa Rica

* International credit ratings agency Moody's Investors Service has downgraded the Costa Rican government’s long-term issuer and senior unsecured bond ratings to 'B1' from 'Ba2' and changed its rating outlook to 'negative'. According to a press release issued on 5 December the drivers for the downgrade were: “the continued and projected worsening of debt metrics on the back of large deficits despite fiscal consolidation efforts; and 2) The significant funding challenges emerging for the country as rising debt, deficits and interest costs lead to rapidly rising borrowing requirements”. The downgrade has been slammed by Costa Rica’s finance ministry as it comes two days after the 57-member unicameral national legislature approved a tax reform which would replace the current 13% sales tax with a 13% value-added tax (VAT) and increase the number of products and services to be taxed among other things.