The ratings are constrained by: Weak public finances. Costa Rica's central government deficit remains close to 4% of GDP (of which almost one-third derives from losses at the central bank). Costa Rica's expenditure mix is rigid, with general government interest expense to revenue at 20% in 2001. Interest expense, personnel costs, and transfers absorb almost all central government revenue each year. Tepid commitment to structural reform. Demonopolization of the state-controlled telecommunication and electricity sectors is unlikely to occur given strong public opposition. In addition, state-owned banks control two-thirds of the onshore banking system, with privatization unlikely. This could have an effect on foreign sentiment and, hence, foreign direct investment (FDI). The deterioration of the external accounts and the resultant impact
