On June 10, 2005, Standard&Poor's Ratings Services revised its outlook on the Republic of Costa Rica to stable from negative. At the same time, Standard&Poor's affirmed its 'BB+' long-term local currency and 'BB' long-term foreign currency ratings on Costa Rica. The ratings on Costa Rica are constrained by: A large, unsupervised offshore banking sector and a high level of dollar lending. Monetary policy that is constrained by quasi-fiscal losses of the central bank, a crawling peg exchange rate regime, and a high level of dollarization. Poor external liquidity. The ratings are supported by: Long-standing political stability, with stronger institutions and more general respect for the rule of law than is found in peer credits. A highly
