LatinNews Daily - 09 December 2021

* International credit ratings agency Moody’s has changed Costa Rica’s outlook from negative to stable, while affirming the country’s long-term issuer and senior unsecured bond ratings. According to a Moody’s press release, the change reflects 1): a gradual deficit reduction and lower funding needs resulting from a recovering economy; and 2) expectations that the current US$1.8bn International Monetary Fund (IMF) financial programme, which was approved by Costa Rica’s congress in July, will support structural policy changes by the next administration (general elections are due in February 2022). Moody's predicts that Costa Rica's fiscal deficit this year will be 5.8% of GDP, down from 8.1% of GDP in 2020 and the 7% initially forecast by Moody’s in early 2021. The credit ratings agency attributes the lower deficits to faster economic growth (it predicts GDP growth of 5% this year as the economy recovers from the coronavirus [Covid-19]-induced recession) and increased revenues. As regards the IMF programme, Moody’s highlights that its main goal is “gradual fiscal consolidation, aiming for a 1% primary surplus by 2023”. According to Moody’s, while “some slippage is likely” and it forecasts “a smaller but still positive primary result of 0.7% of GDP”, it expects that Costa Rica will continue to gradually reduce its deficits as stated under the IMF programme even with a change of government.