LatinNews Daily - 10 June 2020

* International credit ratings agency Standard & Poor’s (S&P) has lowered its long-term foreign and local currency sovereign credit ratings on Costa Rica from 'B+' to ‘B’. The outlook on the long-term ratings is 'negative'. According to a press release from S&P, the downgrade reflects “a larger and persistent worsening in Costa Rica's public finances following a deeper-than-expected economic contraction in 2020”. Costa Rica’s GDP is forecast to contract by 3.6%, due to the impact of the coronavirus (Covid-19) pandemic. The press release adds that the downgrade also “follows mixed signals from the government about whether it will vigorously implement aspects of the 2018 fiscal reform”. It notes the resignation of finance minister, Rodrigo Chaves, at the end of May, after congress passed legislation exempting local governments from complying with aspects of the 2018 fiscal reform. S&P expects the general government deficit to rise to 9% of GDP in 2020 and remain largely unchanged in 2021, and net general government debt to rise above 70% of GDP by 2022.

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