Costa Rica News – This week, we found out that the ratings firm Moody’s lowered Costa Rica’s score from ‘stable’ to ‘negative.’ The outlook change reflects:
- A continued increase in the main debt metrics since 2009;
- The country’s difficulty in passing legislation to reduce high fiscal deficits and limit the increase in the debt burden.
The outlook of the country changed just after Moody’s local analysts issued a warning to Costa Rica that time was running out for financial reform. About the country’s credit rating, they said, “We are reaching the point at which it is time to make a decision.
There is no doubt that the approval of reforms to improve public finances is taking longer than we expected.” The firms’ Gabriel Torres continued to explain that, “We are concerned about the issue of spending and the increase in public debt. For several years, the government has tried to pass a tax reform, but without success.”
This all happened at around the same time that the Minister of Hacienda (Treasury), Edgar Ayales, announced that the country’s “Fiscal Consolidation Plan” will be revealed on October 3rd. Its will address issues and solutions including increasing revenue, decreasing spending, and lowering the dependance on financing.
The country’s current credit rating is at Baa3.
It seems that the government of Costa Rica has been incurring too much foreign debt…….these loans coming from the Chinese and going into the pockets of the Costa Rican government officials are finally having their effects.