Research Update: Costa Rica Long-Term Ratings Lowered To 'B' On Policy Uncertainty Amid Worsening Public Finances; Outlook Negative

Amid the strain associated with the global COVID-19 pandemic, we expect a deeper contraction in Costa Rican GDP and more persistent deterioration of the government's fiscal profile in 2020 and 2021. Mixed signals about the Alvarado Administration's commitment to implement structural fiscal adjustment, with a second change in the minister of finance in six months, have increased policy uncertainty and could pressure liquidity because of higher funding needs from local and external markets. We are lowering our long-term foreign and local currency sovereign credit ratings on Costa Rica to 'B' from 'B+'. The outlook is negative, indicating the risk of a downgrade over the coming 12 months if policy missteps by the Alvarado Administration and Congress further weigh on the

...- Amid the strain associated with the global COVID-19 pandemic, we expect a deeper contraction in Costa Rican GDP and more persistent deterioration of the government's fiscal profile in 2020 and 2021. - Mixed signals about the Alvarado Administration's commitment to implement structural fiscal adjustment, with a second change in the minister of finance in six months, have increased policy uncertainty and could pressure liquidity because of higher funding needs from local and external markets. - We are lowering our long-term foreign and local currency sovereign credit ratings on Costa Rica to 'B' from 'B+'. - The outlook is negative, indicating the risk of a downgrade over the coming 12 months if policy missteps by the Alvarado Administration and Congress further weigh on the country's financial profile....

Research Update