LatinNews Daily - 26 February 2025

*International credit ratings agency Fitch Ratings has revised up its outlook on Costa Rica to positive while affirming the country’s Long-Term Foreign-Currency Issuer Default Rating (IDR) at ‘BB’. Fitch attributes its decision to revise up its outlook to various factors. These include “robust [GDP] growth” of 4.3% in 2024, which, while down from 5.1% in 2023, was still above estimates of potential growth (3%-4%), and improvements in Costa Rica’s external position. It estimates that the country’s current account deficit reached 1.4% in 2024, in line with 2023 and well below its 2010-2019 average (3.7%), with a strong export performance and tourism sector leading to “robust foreign exchange inflows.” Fitch also notes a “gradually declining debt trajectory, and continuation of primary surpluses, despite some easing of fiscal gains”, with central government debt falling below the 60% threshold (59.8%) at end 2024, down from 61.1% in 2023. However, Fitch highlights that a slowdown in revenue growth and increase in total expenditure growth led to a fall in the central government primary surplus to 1.1% of GDP in 2024, down from 1.6% in 2023. It adds that the overall central government deficit grew in line with this deterioration, increasing to 3.8% of GDP in 2024 from 3.3% in 2023, as the high interest burden was unchanged at 4.8% of GDP.