On April 4, 2003, Standard&Poor's Ratings Services revised its outlook on the Republic of Costa Rica's 'BB+' long-term local and 'BB' long-term foreign currency sovereign credit ratings to negative from stable. The negative outlook reflects Costa Rica's heightened vulnerabilities, which result from fiscal slippage and the increased exposure of the banking system to currency risk (in the context of the country's poor external liquidity). Costa Rica's weak liquidity is the result of a relatively low level of liquid international reserves, a rising level of short-term external debt, and sizeable current account deficits. The gross financing gap (current account deficit plus short-term external debt and long-term external amortization) to liquid international reserves (net of the reserve requirements on dollar
