Moody’s lifts Costa Rica

Moody's Investors Service said it raised Costa Rica's long-term foreign- and local-currency issuer ratings to B1 from B2. Concurrently, the agency upgraded the foreign-currency senior unsecured debt rating to B1 from B2. The outlook has been changed to positive from stable.

Moody’s noted the country’s healthier credit profile with increased sovereign liquidity, stronger debt management capabilities and improved debt affordability.

Costa Rica narrowed its central government deficit to 2.5% in 2022 from 5% in 2021. “The 2018 tax reform has continued to yield durable revenue gains through phased increases in both value-added taxes (VAT) and the capital gains tax,” the agency said in a press release.

Turning to the outlook, “The positive outlook reflects the increasing likelihood that favorable credit trends will, over time, enhance Costa Rica's fiscal strength and will eventually offset lingering challenges that constrain the ratings at the current B1 level,” Moody’s said.

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