Limited, albeit improving, monetary and exchange-rate flexibility; Slow pace of legislation enactment and delays in decision-making amid increased political fragmentation; and Rising fiscal risks due to large, and hard to reduce, fiscal deficits and growing (albeit still modest) debt burden. Stable political system; High level of social development; and Relatively diversified economy with strong growth prospects. The ratings on Costa Rica balance the country's limited monetary flexibility and rising fiscal pressures with good economic prospects, stable political system, and relatively high level of social development. Costa Rica's monetary rigidities reflect ongoing losses at the central bank, about 0.6% of GDP in 2011, and a high, albeit declining, level of dollarization, standing at roughly one-third of the financial sector's claims and
