Costa Rica receives World Bank support for economic recovery and promoting low-carbon development
Washington: The World Bank Board of Executive Directors approved today a US$300 million loan to support Costa Rica’s Government program to protect people’s income and jobs from the impact of COVID-19 (Coronavirus), benefit small and medium enterprises (SMEs), reinforce fiscal sustainability in the aftermath of this health crisis, and to lay out the foundations for a strong post pandemic recovery by promoting green growth and low-carbon development.
“We appreciate and have confidence in World Bank’s continued support with this funding that complements the deployment carried out by the Government in this sanitary emergency, said Elían Villegas, Costa Rica’s Finance Minister. “We have endeavored to meet the health and social assistance needs of the population, but there is still a long way to go for sustainable growth.”
The three pillars of the “Fiscal and Decarbonization Management Development Policy Loan” are linked and mutually reinforcing:
· Supporting the COVID-19 crisis response, focusing on the livelihoods of vulnerable segments of the population through cash transfers, and with measures to help preserve jobs and SMEs.
· Helping with implementation of fiscal reform while nurturing the economy with tax enhancing and expenditure reducing measures, together with the wage bill and debt management improvements.
· Fostering the recovery of a steady growth trajectory post COVID-19, by strengthening the country’s foundations for green growth and low-carbon development. Measures include accelerating the deployment of low-carbon technologies and expanding resilience of the national energy system.
Costa Rica has been hit hard by the impact of COVID-19, but containment and relief efforts have been adequate to flatten the curve and reduce deaths. The Government responded quickly at the first signs of the crisis by introducing strong containment measures, which have also brought to a halt the economic progress of late 2019 and early 2020 and resulted in a sharp contraction of the economy.
“We trust the strength of Costa Rica’s economic and health sectors, coupled with a proper policy making process, which is key to reinforce fiscal consolidation and lay out the basis for green and resilient growth,” said Seynabou Sakho, World Bank Country Director for Central America. “The mitigation measures supported by our policy loan will contribute to the authorities’ efforts to preserve jobs and keep people out of poverty during these difficult times.”
The US$300 million operation, financed by the International Bank for Reconstruction and Development, is a fixed spread loan and has a final maturity of 34.5 years including a grace period of five years.
Given the adverse effects from the pandemic, other recently approved World Bank operations will also provide support in helping Costa Ricans. This means mobilizing funds from the Sustainable Fisheries and the Fiscal Management Improvement projects, approved on March 24th and 26th 2020, respectively.