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What happens if ratings agencies mark down Costa Rica?

Monday, October 22, 2018


The Moody's ratings agency is likely to downgrade its evaluation of Costa Rica from Ba2 to Ba3 at least, so creating a disincentive for investors that buy the nation's bonds and raising its borrowing costs.

And worse could come if the government's fiscal reform fails to meet the nation's needs. In that case, the rating will drop further as debt grows.

In the absence of a fiscal reform, or one that is insufficient, the nation would be downgraded on several levels. Moody's says that, in order to avoid a further fall, structural changes will be needed to the budget that combine an increase in the tax take and cuts on state spending.