* International credit ratings agency Moody’s Investors Service has downgraded the Costa Rican government’s long-term issuer and senior unsecured bond ratings to 'B2' from 'B1' and changed its rating outlook to 'stable' from 'negative'. Moody's cites as key drivers for the downgrade: “
High fiscal deficits leading to an upward trend in debt metrics which will remain above rating peers” and “
recurring funding challenges resulting from relatively large borrowing requirements”. Moody’s notes that “
fiscal deficits averaging over 6% of GDP since 2015 have pushed government debt/GDP higher than 'B' rated peers” and “
projects government debt to reach 63% of GDP in 2020, higher than the 56% 'B' peer median”. The government led by President
Carlos Alvarado has announced plans to reduce the fiscal deficit, including the sale of state-run entreprises, the Fábrica Nacional de Licores (Fanal) distillery and the Banco Internacional de Costa Rica (Bicsa) bank, equivalent to 0.03% of GDP and 0.04% of GDP respectively, along with plans to use some ¢226bn (US$400m, equivalent to 0.62% of GDP) from the surplus of state institutions such as the national tourism institute (ICT) and the rural development institute, among others, to pay off the debt.
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