Standard & Poor’s Says
Costa Rica’s Risk Rating
Improved
(Infocom) —
Risk-analysis firm
Standard & Poor’s (S&P)
has announced an
improvement in Costa
Rica’s risk rating,
moving the country’s
credit rating up from
stable to positive.
According to the global
firm, this comes in
recognition of Costa
Rica’s good fiscal
policy management and
its overall economic
policy in the past few
months — which has led
to reducing public debt
and reaching positive
fiscal results without
affecting public
investment and
expenditures in social
programs.
Standard & Poor’s
indicated that the
revised outlook is the
result of a substantial
reduction of Costa
Rica’s public debt
burden, which improved
the country’s fiscal
profile and its ability
to handle its
obligations. The firm
pointed out that a
strong growth of tax
revenue, coupled with
the growth of the
economy, have
contributed to slashing
debt as a percentage of
the Gross Domestic
Product (GDP) — and this
is expected to go even
lower in 2008. S&P also
said that the country’s
increased exchange
flexibility could reduce
its vulnerability to
sudden external shocks.
Regarding Costa Rica’s
future outlook, S&P
indicated that the
Central American Free
Trade Agreement (CAFTA)
could boost attraction
of investment into the
country and
specialization in the
isthmus over the next
few years. The firm also
warned about the
importance of the
Central Bank’s
capitalization project,
which would help improve
the effectiveness of the
exchange policy,
boosting liquidity in
the country.
Treasury Minister
Guillermo Zuñiga said he
was very satisfied with
the news, calling the
rating a vote of
confidence about the
country’s fiscal
policies to
significantly increase
tax revenue, decrease
the need to obtain
financing in the stock
market, improve its
long-term debt profile,
and lower the pressure
placed by such debt in
the short term.
But Zuñiga also said
it’s important to forge
ahead with approval of
the CAFTA implementation
bills that are still
pending so that the
trade deal can fully go
into effect, as well as
pass the Central Bank’s
capitalization bill —
which he considers key
to improving the
country’s monetary
policy and slash
inflation, just like S&P
indicated. Zuñiga added
it’s important to be
prudent in fiscal
management, as this is
Costa Rica’s main
strength when dealing
with adverse conditions
in the international
markets.
Standard & Poor’s is a
leading provider of
financial market
intelligence. The
world’s foremost source
of credit ratings,
indices, investment
research, risk
evaluation and data,
Standard & Poor’s
provides financial
decision-makers with the
intelligence they need
to feel confident about
their decisions.
Many investors know
Standard & Poor’s for
its respected role as an
independent provider of
credit ratings and as
the home of the S&P 500
benchmark index. But
Standard & Poor’s global
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provides a wide array of
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