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Vibrant dollar adds to Costa Rica's financial woes

Wednesday, November 7, 2018

Some people in Costa Rica have been claiming that the price of the US dollar -- currently around 630 colones in the wholesale market -- is a measure that aims to back the government's fiscal plan. What is for sure is that the behavior of the US currency will increase the country's deficit and debt.

By the end of the year, debt service is likely to rise by 1 percent of GDP simply because almost half of the government's debt is in dollars.

As a result, the increase in the value of the dollar directly affects the government and the deficit, which is expected to close the year at 7.2 percent of GDP. However, this figure could rise due to the Finance Ministry's payment of interests in bonds.