Costa Rica's Economy Strong, Says International Monetary Fund
Costa Rica's economic performance has been strong over the past 18 months, with growth higher than expected, reports the International Monetary Fund (IMF).

In an statement Friday,  the IMF said Costa Rica's vibrant economy is the result of sound economic policies, strong external demand, and favorable conditions in international capital markets.

The IMF said Costa Rica’s "spending restraint and improved revenue collections have contributed to the lowest public sector deficit in a decade."

While inflation in the country has remained in the double digits, Costa Rica's "near-term" economic outlook remains favorable, the IMF reported. For 2006, the country's gross domestic product is expected to increase by 6.5 percent, while inflation is likely to remain at 12 percent.

The IMF said, however, that Costa Rica’s economic outlook is not "without risks as a cooling of the U.S. economy or a further increase in (global) oil prices could adversely" affect economic activity.

Costa Rica's main challenge, said the IMF, is to increase economic growth in a "sustainable and balanced way," adding that higher economic growth, combined with a significant reduction in inflation, "would improve the living standards of all citizens and reduce poverty."

The IMF said it "strongly supported" the Costa Rican government's commitment to seek ratification and implementation of a U.S. free-trade pact with Central America and the Dominican Republic, (CAFTA-DR), known locally as the Tratado Libre de Comercio (TLC).

The United States, Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua signed CAFTA-DR in August 2004.  Costa Rica is the only signatory country to yet ratify the agreement.

Costa Rican government officials are hoping to have the TLC approved and into force by no later than December.