Costa Rica's Economic Conditions Improving, Says IMF

by Mike Godfrey, Tax-News.com, Washington

24 May 2004

Despite a recent wobble in the financial markets, an IMF survey of Costa Rica has concluded that the general economy is on a more sound footing than last year led by increased levels of investment and consumer confidence.

“Macroeconomic conditions have improved since the last ...consultation in early 2003,” the fund observed in a statement following an economic assessment by seven IMF representatives earlier in the month.

Congratulating the government for its “prudent" monetary policy which has stabilized inflation levels, the IMF also noted: “Growth has recovered, led by investment and exports, international reserves increased, and the fiscal deficit narrowed in 2003.”

However, the fund urged the government to continue reducing the level of its fiscal deficit and pledged strong support for tax reforms under the long-awaited Permanent Fiscal Reform Package.

The IMF also recommended improvments in the supervision of the financial sector to inoculate the nation against downturns in the global economy and movements in US interest rates, a factor which latterly sparked panic among investors in the country’s dollar funds, leading to many thousands of investors exiting the market as government bond prices dropped.

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