December 20, 2018 / 4:43 AM / a year ago

Costa Rica repays central bank for loan following tax reform

San Jose, Dec 19 (Reuters) - Costa Rica said on Wednesday that it would repay the central bank for a special loan of 498 billion colones ($833 million) that it requested in September to bolster the country’s finances.

The payment eases concerns sparked by the government’s use of the so-called treasury letter, which had to be repaid within 90 days.

Earlier this month, the Central American country’s legislative assembly approved a package of tax increases and fiscal measures, which had triggered protests from some government workers.

“We are managing to pay 100 percent of the treasury letter, six days before the deadline, thanks to the recovery of investor confidence as a direct result of the approval of the tax reform,” Finance Minister Rocio Aguilar told a news conference.

Concerns about Costa Rica’s public debt, which has doubled over the past decade, have battered its bonds and currency.

The tax reform is expected to raise about $750 million in its first year, or about 1.3 percent of gross domestic product (GDP).

But ratings firm Moody’s warned earlier this month that it would likely be insufficient to reduce Costa Rica’s high debt. The agency downgraded the country’s rating and placed it on negative outlook. (Writing by Julia Love; Editing by Jacqueline Wong)

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