The International Monetary Fund has concluded its Article IV consultation and mid-term review of Costa Rica’s Flexible Credit Line arrangement, finding that the country continues to meet the qualification criteria and that the current level of access remains appropriate. The review describes an economy that continued to absorb external shocks in 2025, with real GDP growth of 4.6 percent, record international reserves and solid export performance, while ample buffers including the Flexible Credit Line leave Costa Rica well placed to manage spillovers from the war in the Middle East. Growth is projected to slow to 3.6 percent in 2026 as higher oil prices and tariffs outweigh rising investment and strong exports. Inflation has remained unusually weak, with eleven consecutive months of deflation and nearly three years below the central bank’s 3 percent target, so Directors backed a cautious, data dependent monetary stance and a pause in easing while the effects of the Middle East war on commodity prices are assessed, alongside readiness to lower the policy rate if needed to keep inflation and expectations anchored. They also urged continued adherence to the fiscal rule and revenue reforms to create room for priority spending after the primary surplus fell to 0.9 percent of GDP and central government debt rose to 60.4 percent of GDP at end-2025, plus full implementation of risk based and consolidated supervision, a new bank resolution and deposit insurance framework, a clearer framework for fintech firms and digital assets, and broader labor, infrastructure, regulatory and crime reduction reforms. Costa Rica intends to continue treating the Flexible Credit Line as precautionary under its state contingent exit strategy. With the authorities’ consent, the IMF will publish the staff report shortly.

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