Spanish
The International Monetary Fund's (IMF) recommendation for fiscal reform and a relaxation of monetary policy marks a new chapter in the economic agenda of Costa Rica, after 36 consecutive months with inflation below the official target, as reported by EFE. The international organization urged the country to introduce changes in the tax system and to adjust the strategy of the Central Bank of Costa Rica to facilitate the return of inflation to the target range.
During the technical visit carried out between February 25 and March 9, the IMF proposed a tax reform aimed at reducing tax expenditure, applying a single rate for corporate income, and increasing the progressivity of the personal income tax. In addition, it proposed the adoption of a "feebate" mechanism linked to vehicle emissions. According to the organization's report, these measures would allow for an increase in state revenues and strengthen debt management, thus supporting investment in capital, education, security, health, and targeted social transfers.
The recommendation comes in a context where the year-on-year inflation in Costa Rica reached -2.7% in February 2026, accumulating 10 months of deflation and 36 months below the target range of between 2% and 4% established by the Central Bank. The IMF noted that "further easing of monetary policy is needed to facilitate the return of inflation and inflation expectations to the level set as a target." The document also suggests that additional cuts in the monetary policy rate would contribute to strengthening domestic demand and avoid a prolonged stagnation of inflation below the target.
We recommend reading:Saudi Arabia, Emirates and Kuwait say they have intercepted attacks launched by Iran
According to EFE, the IMF recommended that the country continue reducing dollarization, gradually relax regulatory limits on foreign investments by pension funds, and avoid legislative proposals that allow early withdrawals from the pension system. Costa Rica's relationship with the IMF has intensified since 2021, when the country signed an Extended Fund Facility (EFF) agreement for $1.778 billion to address post-pandemic recovery and stabilize public finances. Subsequently, in 2022, the country was a pioneer in signing an agreement under the Resilience and Sustainability Facility (RSF) for $730 million, focused on the climate agenda. According to the IMF's official portal, these credit lines have served to implement measures of fiscal consolidation and structural reforms, including the strengthening of the fiscal rule and the reduction of public debt, which went from 68% of GDP in 2020 to about 61% in 2023. In fiscal terms, *EFE* highlights that the country managed to move from **persistent deficits** to a **primary surplus and prioritized** controlling spending without affecting social investment. Economic performance has been marked by the boost in exports, especially from free trade zones, with a **real GDP growth of 4.6% in 2025**. The **IMF** projects a **slowdown to 3.8% in 2026**.The organization's report also highlights the importance of institutionalizing the autonomy of the Central Bank and maintaining the reformist impulse to ensure fiscal and monetary sustainability. According to the analysis by EFE, the Costa Rican economy has shown resilience, although the inflationary environment and fiscal challenges require new coordinated actions.
