Costa Rica: Report for the 2026 Article IV Consultation and Review under the Flexible Credit Line Arrangement-Press Release; Staff Report; Informational Annex; and Statement by the Executive Director for Costa Rica

Author: International Monetary Fund. Western Hemisphere Dept., International Monetary Fund. Strategy, Policy, and & Review Department

Costa Rica continues to weather well the effects of external shocks as it now faces new uncertainties linked to the Middle East war.

Volume/Issue: Volume 2026 Issue 116

Publication date: June 2026

ISBN: 9798229048651

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Topics covered in this book

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Exports and Imports , Inflation , Money and Monetary Policy , Public Finance , arrangement classification , Financial Sector Assessment Program , exchange rate arrangement , policy framework , foreign currency , Inflation , Exports , Exchange rates , Global , Middle East , Caribbean , Central America , South America

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Summary

This paper presents Costa Rica’s 2026 Article IV Consultation and review under the Flexible Credit Line arrangement. Costa Rica continues to weather well the effects of external shocks, with growth remaining strong in 2025, underpinned by a robust export performance. Growth is expected to moderate in 2026, due to headwinds stemming from the war in the Middle East, notwithstanding still-strong export growth and rising investment. The fiscal stance is expected to be broadly neutral in the coming years. Revenue-enhancing tax policy changes have the potential, though, to increase progressivity and provide additional resources to fund a growth-supporting increase in spending. There is some scope for a pause in monetary easing to assess the impact of the war and its likely duration, and the implications for domestic price dynamics. Boosting medium-term growth will require policies to increase labor force participation, address skills mismatches, upgrade the quality of trade and transport infrastructure, remove regulatory bottlenecks, and tackle rising violent crime. Costa Rica continues to make progress in pursuit of its climate resilience and decarbonization goals.