Costa Rica's external profile has strengthened on solid exports of goods and services, a larger liquidity buffer as the government posts a primary (non-interest) fiscal surplus for a second consecutive year, and dynamic economic growth. We expect sound fiscal execution to continue given modification of the fiscal spending rule and implementation of the public employment regime, which should facilitate the government's planned tapping of global markets under its multiyear borrowing authority. We raised our long-term sovereign credit ratings on Costa Rica to 'BB-' from 'B+'. The stable outlook indicates our expectation that improvements in external and fiscal indicators will continue despite a complex global backdrop and economic slowdown, while the government strengthens liquidity management as its debt burden remains high.
