The Executive Board of the World Bank (WB) approved this past week a loan of US $ 300 million to support the efforts of the Government of Costa Rica to protect people’s income and jobs from the impact of COVID-19, strengthen the small and medium-sized enterprises (SMEs), strengthen fiscal sustainability, and lay the foundations for a strong post-pandemic recovery based on green and low-carbon development.
“This operation is part of a solid and lasting relationship with the World Bank”, said Elian Villegas, Minister of Finance of Costa Rica. “It supports our efforts to respond to the different waves of the pandemic, while we continue to establish the conditions for a strong and sustainable recovery through economic, fiscal, and climate action reforms”. The second “Development Policy Loan for Fiscal and Decarbonization Management” is based on the first loan approved on June 24, 2020.
The series supports 3 mutually reinforcing pillars:
• Support the response to the pandemic by focusing on the livelihoods of vulnerable populations, through cash transfers and measures to help preserve jobs and SMEs.
• Contribute to increasing structural tax revenues and containing growth in spending while ensuring the sustainability of public finances after the health crisis.
• Promote green growth and low-carbon development for a post-pandemic recovery that is competitive, climate-smart and sustainable, including through measures to accelerate the deployment of clean technologies.
Costa Rica has a strong health care system and authorities responded promptly to the health emergency. But the country has experienced major social, economic and fiscal shocks since 2020. It is currently facing a severe third wave of COVID-19.
“We work together to protect the poor, the most vulnerable, and those who have lost their jobs or experienced income reductions, including women and youth”, said Michel Kerf, World Bank Director for Central America and the Dominican Republic. “We congratulate the authorities for the measures taken to strengthen the efficiency of the social safety net and vocational programs, the insolvency framework, human resources, debt management and the transparency of the energy sector. Many of these measures also contribute to rebuilding better by incorporating strong climate change targets”.
The US$ 300 million operation, financed by the International Bank for Reconstruction and Development (IBRD), is a variable margin loan in a single currency -in USS- and has a final maturity of 20 years, including a 4-year grace period.
World Bank Group Response to COVID-19
“Since the beginning of the COVID-19 pandemic, the World Bank Group has committed more than US$ 125 billion to combat the health, economic and social impacts of the pandemic, the fastest and largest response in its history to a crisis. The funding is helping more than 100 countries strengthen pandemic preparedness, protect the poor and secure jobs, and launch a climate-friendly recovery without delay. The Bank is also providing US$ 12 billion to help low and middle-income countries purchase and distribute COVID-19 vaccines, tests and treatments”.