LatinNews Daily - 20 June 2022

In brief: IMF highlights Costa Rica’s commitment to fiscal stability

*The International Monetary Fund (IMF) has sent a team to Costa Rica where it met representatives from the new government led by President Rodrigo Chaves to discuss policy priorities in preparation for the third review mission under the Extended Fund Facility (EFF) arrangement agreed with the previous government in 2021. According to an IMF statement following the visit, the Costa Rican authorities “renewed their firm commitment to ensuring debt sustainability, while safeguarding monetary and financial stability and protecting the most vulnerable amid rising global and domestic pressures.” Chaves had previously mootedimproving” the US$1.78bn EFF. The same IMF statement highlighted as challenges, “heightened external pressures” and the ongoing coronavirus (Covid-19) pandemic. It notes that “higher global commodity prices are weighing on the current account and international reserves through a rising oil import bill, in the context of sustained capital outflows from local pension funds”. It also underlines that external pressures are feeding through to inflation, which is increasing rapidly beyond the central bank (BCCR)’s tolerance band, adding that after a strong rebound in 2021, with real GDP growth reaching 7.8%, “high frequency indicators point to a softening in economic activity in 2022”.

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