Development bank will loan country at least $700 million

Costa Rica has been offered a loan ranging from $700 million to $1.06 billion by the Inter-American Development Bank.

The development bank said it approved a new country strategy with Costa Rica for the period from this year to 2014. The strategy seems to address all the country’s woes.

The bank’s statement in a press release did not outline the payback provisions of the load. Typically such loans carry low interest and a grace period for a few years when no payments are expected.

The bank is believed to support President Laura Chinchilla’s proposal for $1 billion in new taxes.

Said the bank in a release: “The strategy focuses on sectors where Costa Rica faces constraints for its growth, such as transport, energy, early childhood development and innovation. It also covers issues that have demanded priority attention in recent years, such as public safety and health. The sectors identified in the strategy are in line with the pillars of the Costa Rican government plan.”

The low quality of the infrastructure, especially in transport, is one of the factors that affect Costa Rica’s productivity, increasing logistical costs and affecting business decisions regarding location, investment and production, it said.

The development bank said it seeks to improve the quality and maintenance of the national and cantonal road network as well as Costa Rica’s ports and airports, and the goal is to reduce travel costs and times for both goods and persons. While highway infrastructure is one aspect of the plan, emphasis is also placed on public transport, it said.

The development bank also said it will support investments to modernize and strengthen Costa Rica’s energy sector with the goals including boosting the installed generation capacity from 2,412 megawatts (in 2009) to 2,677 megawatts in 2014 and attracting more private sector
producers by reinforcing the regulatory framework. The bank also said it plans to promote the use of renewable energy sources, raising generation from 1,787 megawatts to 1,972 megawatts and strengthening Costa Rica’s integration in the regional electricity market.

The strategy seeks to contain violence and crime in Costa Rica by boosting the government’s capacity to prevent and fight organized crime. The program includes professionalizing and training police forces, developing social prevention programs for at-risk young adults and communities and promoting the social reintegration of lawbreakers, it said.

The development bank also said:

• Children from poor households face significant delays in their physical, emotional and cognitive development. Evidence shows that early childhood development interventions help break the intergenerational transmission of poverty. The bank will provide support for strengthening a system to protect early childhood. Plans include building and equipping the national child care and development network and stimulating labor market access for the mothers it serves.

• Costa Rica’s has very positive health indicators but budget limitations have affected the maintenance and expansion of the service network. The strategy seeks to update coverage to fit a new epidemiological profile based on an aging population, as well to expand access to health services for the poorest. It also aims to modernize and expand primary and tertiary health facilities and to improve the quality and organization of the hospital system.

• The bank will focus on strengthening and increasing the scope of financing instruments, including technological development funds and seed capital. It will promote the development of advanced human technical/scientific capital adapted to the demands of the business sector. The bank will also support technology-transfer programs and activities that link universities with businesses, and plans to increase access to and the use of information and communication technologies in the productive sector.

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