Risk-analysis firm Standard & Poor’s (S&P) has announced an improvement in Costa Rica’s risk rating, moving the country’s credit score up from stable to positive. This revised outlook is a result of a decline in the government’s debt burden, buoyant tax revenues and stable GDP growth.
“The ongoing improvement in the sovereign’s fiscal and debt profile, combined with more exchange rate flexibility and a more effective monetary policy, could reduce Costa Rica’s vulnerability to sudden external shocks, potentially improving creditworthiness,” S&P sovereign credit analyst Joydeep Mukherji said in a statement.
Costa Rica’s entry into the DR-CAFTA free trade agreement should provide protection for the economy should the U.S. economy worsen more rapidly than expected. It could also attract additional investment into the country and specialization in the isthmus over the next few years.
S&P also stressed the importance of the Central Bank’s capitalization project, which would help improve the effectiveness of its exchange policy, boosting liquidity in the country. The firm also noted that the ongoing improvement in the nation’s fiscal and debt profile, combined with more exchange rate flexibility and a more effective monetary policy, could reduce Costa Rica’s vulnerability to other sudden external shocks, potentially improving its creditworthiness even further.
Treasury Minister Guillermo Zuñiga called the rating a vote of confidence regarding the country’s fiscal policies to significantly increase tax revenue, decrease the need to rely on the stock market for financing, improve its long-term debt profile, and reduce debt pressure in the short term.
[...] follows closely on the heels of a similar announcement last month by Standard & Poor’s, which upgraded Costa Rica’s risk rating from [...]
[...] follows closely on the heels of a similar announcement last month by Standard & Poor’s, which upgraded Costa Rica’s risk rating from [...]