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LatinNews Regional Monitor: Caribbean & Central America - 30 April 2020

In brief: IMF approves new funds for Costa Rica

* The International Monetary Fund (IMF) has announced that it has approved Costa Rica’s request for US$504m in emergency financial assistance under the Rapid Financing Instrument (RFI), to support coronavirus (Covid-19)-related health spending. According to the IMF, these funds will help Costa Rica meet the urgent balance of payments need stemming from the pandemic. The IMF notes that containment measures such as closures of schools and public offices, reduced work hours in the private sector, and the construction of a specialised hospital for Covid-19 treatment, coupled with the global economic downturn, are expected to take “a major toll on the economy in the short term and cause a temporary deterioration in the country’s fiscal and external positions”. The IMF cites estimates that the pandemic opened a balance of payments gap of about US$1.6bn. It also notes actions taken by the Costa Rican government to mitigate the economic impact of the pandemic, such as a temporary relaxation of spending limits under the ‘law on strengthening of public finances’, and a package of fiscal measures targeted to protect the most affected economic sectors and populations.

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