Costa Rica receives US$300 million from World Bank to support post pandemic recovery

WASHINGTON, June 29, 2021. The World Bank Board of Executive Directors approved today a US$300 million loan in support of Costa Rica’s Government efforts to protect people’s income and jobs from the impact of COVID-19, strengthen small and medium enterprises (SMEs), reinforce fiscal sustainability, and lay out foundations for a strong post pandemic recovery based on green and low-carbon development.

“This operation is part of a solid and long-lasting relationship with the World Bank,” said Elian Villegas, Costa Rica’s Finance Minister. “It supports our efforts to respond to the different waves of the pandemic, while continuing to set the conditions for a strong and sustainable recovery through economic, fiscal, and climate-action reforms.”

The second “Fiscal and Decarbonization Management Development Policy Loan” builds on the first loan approved on June 24, 2020. The series supports three pillars that mutually reinforce each other:

· Supporting the COVID-19 crisis response, focusing on the livelihoods of vulnerable segments of the population through cash transfers, and with measures to help preserve jobs and SMEs.

· Helping to increase structural tax revenues and to contain growth in spending, while ensuring the sustainability of public finances in the aftermath of the pandemic.

· Promoting green growth and low-carbon development for a post-pandemic recovery that is competitive, climate-smart, and sustainable; including through measures to accelerate the deployment of clean technologies.

Costa Rica has a strong health care system and the authorities promptly responded to the health emergency; nevertheless the country has experienced large social, economic, and fiscal impacts since 2020, and currently faces a third, and severe, wave of COVID-19.

“We stand together to protect the poor and most vulnerable and those who have lost their jobs or experienced income reductions, including women and youth,” said Michel Kerf, World Bank Country Director for Central America and the Dominican Republic. “We commend the authorities for taking important measures to enhance the efficiency of the safety net and vocational programs, the insolvency framework, the human resource and debt management, and the transparency of the energy sector. Many of these measures also contribute to building back better by incorporating strong climate change objectives.”

The US$300 million operation, financed by the International Bank for Reconstruction and Development, is a single currency variable spread loan in US dollars, and has a final maturity of 20 years including a grace period of 4 years.

World Bank Group COVID-19 Response

Since the start of the COVID-19 pandemic, the World Bank Group has committed over $125 billion to fight the health, economic, and social impacts of the pandemic, the fastest and largest crisis response in its history. The financing is helping more than 100 countries strengthen pandemic preparedness, protect the poor and jobs, and jump start a climate-friendly recovery. The Bank is also providing $12 billion to help low- and middle-income countries purchase and distribute COVID-19 vaccines, tests, and treatments.

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