The ratings on the Republic of Costa Rica 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
