September 26th, 2013 (InsideCostaRica.com) Ratings firm Moody’s lowered its outlook for Costa Rica from ‘stable’ to ‘negative’ this week over concerns about the country’s rising debt burden, fiscal deficits and stalled legislation to address the problems.
The change in outlook came almost immediately after Moody’s local analysts issued a warning to the country, saying that time was running out for fiscal reform.
“We are reaching the point at which it is time to make a decision (on the country’s credit rating). There is no doubt that the approval of reforms to improve public finances is taking longer than we expected,” Moody’s Gabriel Torres told local daily, La Nacion, earlier this week.
“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,” Torres said.
Meanwhile, Edgar Ayales, Minister of Hacienda (Treasury) has said that the country’s “Fiscal Consolidation Plan” would be revealed to the public on October 3rd, which aims to increase revenue, decrease spending, and lower the country’s dependence on internal and external financing. It is not expected that the move will make any immediate change in Moody’s outlook, however.
Costa Rica’s credit rating stands at Baa3.