Costa Rica Negotiates $250 Million Loan with Inter-American Development Bank
Minister of Finance Nogui Acosta announces advancements in budget support loan for demographic challenges.
SANTIAGO DE CHILE.
The Costa Rican government is progressing in the negotiation of a budget support loan with the Inter-American Development Bank (IDB) amounting to up to $250 million.
The financing aims to address the challenges posed by the aging population through the development of an appropriate strategy.
Nogui Acosta, the Minister of Finance, confirmed that advancements were made during his participation in the Annual Meetings of the IDB's Board of Governors held in the Chilean capital.
The executive branch aims to obtain approval for the loan from the multilateral organization this year, thereby enabling the funds to be utilized in 2026, contingent on the necessary authorization from the Legislative Assembly.
This loan is part of a broader strategy, including an anticipated total of $454.2 million in international loans planned for the next year.
In the Budget Law for 2025, the Ministry of Finance projects the utilization of $844.2 million.
In addition to the IDB, the loans include funds from the Central American Bank for Economic Integration, the French Development Agency, and the World Bank.
“The loan is intended for budgetary support and aims to outline a series of milestones to be achieved.
We are evaluating the care system to enhance resource efficiency and achieve a greater impact,” Acosta stated.
He emphasized that while the operation will include specific objectives, the funds would not be allocated for infrastructure investments in elder care but rather for the improvement of public policies.
“For instance, the Non-Contributory Regime (a pension fund for impoverished individuals) operates as a subsidy.
The Costa Rican Social Security Fund charges us 4% for administering this regime.
Currently, we transfer ¢200 billion annually to the Fund, of which ¢8 billion pertains to administrative expenses not directly related to pensions.
It is necessary to discuss the most effective governance model for such subsidies,” Acosta remarked.
As of the end of 2024, Costa Rica recorded a debt balance of $1.63 billion with the IDB from 11 credit operations granted to the country.
Ilan Goldfajn, the IDB President, stated during a closing press conference that the organization is committed to providing fiscal support to its member countries.
Notably, budget support loans are designed to offer financing with preferential interest rates.
Costa Rica is not the sole country seeking financing from the IDB.
Argentina and Chile have expressed interest in participating in a new regional program aimed at enhancing resilience against natural disasters, which is intended to finance preventive measures against potential adverse events.
“We collaborate with the 26 member countries.
In these meetings, we do not discuss specific countries, as it is not the right time, but we will share updates on negotiation progress later,” Goldfajn indicated.
Furthermore, Minister Acosta revealed ongoing efforts with the IDB to reduce exchange rate risks.
“We had meetings with the Bank's Treasury to delve into these processes.
We will seek to mitigate the risks associated with interest rates,” he mentioned.
As of January, the Central Government had a total debt of ¢29.33 trillion, with 26.5% identified as external obligations, predominantly denominated in dollars, according to data from the Ministry of Finance.
Last year, the government requested the IDB to manage liabilities to mitigate risks associated with exchange rate volatility and interest rates.
In this context, Costa Rica asked the organization to convert debts in dollars to colones and Swiss francs, totaling $830 million and $800 million, respectively.
The de-dollarization of sovereign debt represents an innovative strategy to mitigate exchange rate risk, promoted by the IDB.
“These debt management operations reaffirm the IDB's commitment to Costa Rica and its needs.
Innovative financial solutions like this allow for a reduction of public dollar-denominated debt, with fixed and highly competitive interest rates,” asserted Francisco Javier Urra, IDB representative in Costa Rica, last December.
The Costa Rican government is progressing in the negotiation of a budget support loan with the Inter-American Development Bank (IDB) amounting to up to $250 million.
The financing aims to address the challenges posed by the aging population through the development of an appropriate strategy.
Nogui Acosta, the Minister of Finance, confirmed that advancements were made during his participation in the Annual Meetings of the IDB's Board of Governors held in the Chilean capital.
The executive branch aims to obtain approval for the loan from the multilateral organization this year, thereby enabling the funds to be utilized in 2026, contingent on the necessary authorization from the Legislative Assembly.
This loan is part of a broader strategy, including an anticipated total of $454.2 million in international loans planned for the next year.
In the Budget Law for 2025, the Ministry of Finance projects the utilization of $844.2 million.
In addition to the IDB, the loans include funds from the Central American Bank for Economic Integration, the French Development Agency, and the World Bank.
“The loan is intended for budgetary support and aims to outline a series of milestones to be achieved.
We are evaluating the care system to enhance resource efficiency and achieve a greater impact,” Acosta stated.
He emphasized that while the operation will include specific objectives, the funds would not be allocated for infrastructure investments in elder care but rather for the improvement of public policies.
“For instance, the Non-Contributory Regime (a pension fund for impoverished individuals) operates as a subsidy.
The Costa Rican Social Security Fund charges us 4% for administering this regime.
Currently, we transfer ¢200 billion annually to the Fund, of which ¢8 billion pertains to administrative expenses not directly related to pensions.
It is necessary to discuss the most effective governance model for such subsidies,” Acosta remarked.
As of the end of 2024, Costa Rica recorded a debt balance of $1.63 billion with the IDB from 11 credit operations granted to the country.
Ilan Goldfajn, the IDB President, stated during a closing press conference that the organization is committed to providing fiscal support to its member countries.
Notably, budget support loans are designed to offer financing with preferential interest rates.
Costa Rica is not the sole country seeking financing from the IDB.
Argentina and Chile have expressed interest in participating in a new regional program aimed at enhancing resilience against natural disasters, which is intended to finance preventive measures against potential adverse events.
“We collaborate with the 26 member countries.
In these meetings, we do not discuss specific countries, as it is not the right time, but we will share updates on negotiation progress later,” Goldfajn indicated.
Furthermore, Minister Acosta revealed ongoing efforts with the IDB to reduce exchange rate risks.
“We had meetings with the Bank's Treasury to delve into these processes.
We will seek to mitigate the risks associated with interest rates,” he mentioned.
As of January, the Central Government had a total debt of ¢29.33 trillion, with 26.5% identified as external obligations, predominantly denominated in dollars, according to data from the Ministry of Finance.
Last year, the government requested the IDB to manage liabilities to mitigate risks associated with exchange rate volatility and interest rates.
In this context, Costa Rica asked the organization to convert debts in dollars to colones and Swiss francs, totaling $830 million and $800 million, respectively.
The de-dollarization of sovereign debt represents an innovative strategy to mitigate exchange rate risk, promoted by the IDB.
“These debt management operations reaffirm the IDB's commitment to Costa Rica and its needs.
Innovative financial solutions like this allow for a reduction of public dollar-denominated debt, with fixed and highly competitive interest rates,” asserted Francisco Javier Urra, IDB representative in Costa Rica, last December.
