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Thread: Costa Rica seeking World Bank loan to cover debt, government expenses for 2015

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    Administrator Jonesie's Avatar
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    Costa Rica seeking World Bank loan to cover debt, government expenses for 2015

    September 24th, 2014 (InsideCostaRica.com) The government of Luis Guillermo Solís is seeking a loan from the World Bank to cover its debt payments and fund government expenses for the first half of 2015.

    Ministry of Finance officials said the talks, which began on Monday, are at an early stage and could take several months before a possible loan package would be presented to the Legislature for approval.

    Costa Rica has more than $1.7 billion in bonds coming to maturity in the first half of 2015 alone, and will need to refinance at least 61% of that amount with new debt in order to make good on its obligations. In June alone, investors will be calling home more than $660 million in Costa Rican debt. Those figures only include bonds issued by the Treasury – The Central Bank also has bonds coming to maturity next year, though mostly in the second half.

    In addition, the government will require funding to meet its own expenses as set out in the 2015 National Budget. The government’s fiscal deficit is expected to reach 6% of GDP next year. The country’s debt-to-GDP ratio is expected to reach close to 40% of GDP this year.

    Finance officials have not made public the amount of the loan sought by the country, saying only that it would be similar to a loan taken by the country in 2009 for $500 million.

    The country is also expected to issue additional bonds next year, though will likely be forced to pay higher interest rates after having its credit rating downgraded to junk status by Moody’s earlier this month. The country issued $1 billion in Eurobonds in April of this year.

    The government also indicated it would seek to negotiate a “cooperation grant” with World Bank officials, which would not require repayment, based on the “new government’s view for the country.”

    Costa Rica’s credit rating was cut to junk status by Moody’s Investors Service earlier this month, based on the country’s widening deficit and large debt burden.

    Finance Minister, Helio Fallas said at the time that the country’s fiscal situation was “inherited” by the Solís administration from the administration of former president Laura Chinchilla.

  2. #2
    Administrator Jonesie's Avatar
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    I'll take 3 cooperation grants with extra cheese.

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    Moderator Speedy1's Avatar
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    Costa Rica is really not in any debt as significant as the USA and many countries in Europe. Costa Rica's problem is the size of its economy engine and the relevance of the Colon. We are talking about a currency that follows the U.S. Dollar around like that little dog that used to follow "Spike" around in the Warner Brothers' cartoons. The USA can get away with Trillions in debt, but when Costa Rica needs $500 Million, everybody else in the world is saying, "What's up with the plastic red money, Yo?"

    That's not really CR's fault, but they do need to accept the issue and deal with it. Playing the USA and China against each other might not have been the best Political Maneuver in the history of mankind. I just bought a desktop globe at Universal that shows the Falklands as "Las Malvinas", and Taiwan as a part of mainland China. Well... The next time Solis talks with Obama on the phone, Obama will say, "I just spoke with Queen Liz an hour ago... and... We Are Not Amused."

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