Costa Rica project 515-0260 · 1992 · financial sector

Program, follow-on to 5150250, to support policy reforms aimed at promoting trade liberalization and economic growth in Costa Rica, thus positioning the country for early participation in the all aspects of the Enterprise for the Americas Initiative. The program will consist of a single cash transfer of $20 million, which will be used to finance private, and possibly, public sector imports from the United States. Local currency generations will be used to reduce the deficit of the Central Bank. Conditionality will address the areas of macroeconomic stabilization, liberalization of the foreign exchange regime, trade liberalization, and public sector efficiency. Key targets are to: (1) reduce the public sector deficit (including Central Bank losses) from about 2.0% of the GDP in 1991 to not more then 1.0% in 1992; (2) abandon the "crawling peg" mechanism for determining exchange rates in favor of a market determined exchange rate, liberalize the capital account of the balance of payments by 6/92, permit private banks to issue dollar- denominated certificates of deposit, permit public banks to open dollar-denominated checking accounts and make dollar-denominated loans, and permit a

Source: DEC abstract, PD-ABD-842 (1992). The source's own text.