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LatinNews Daily - 28 February 2020

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In brief: IMF warns on Costa Rica’s fiscal deficit

* The International Monetary Fund (IMF) has warned that Costa Rica’s large fiscal deficit is the main risk to macroeconomic stability, with the public debt projected to exceed 60% of GDP in 2020. The IMF made its remarks in a report issued following a recent visit to the country. The IMF report notes that “successful implementation of the fiscal reform approved in end-2018 and the fiscal rule that came into effect with the 2020 budget remain key to preserving macroeconomic stability and boosting confidence” and the successful issuance of a US$1.5bn Eurobond in November 2019 “helped reduce pressures on domestic interest rates even further”. However, it highlights that the central government primary deficit still rose to 2.8% of GDP in 2019, and the overall deficit rose to 7% of GDP, its highest level in more than three decades, owing to “a growing interest bill, higher capital spending, and payment of some transfers owed in 2018”. Overall the IMF underlined that “macroeconomic conditions remain broadly stable, but growth continues to be subdued” with overall estimated GDP growth of 2.1% in 2019, although this is projected to rise to 2.5% in 2020.