SAN JOSE (Reuters) - Costa Rica’s congress on Tuesday approved a $350 million loan from the Inter-American Development Bank (IDB) to lower its debt, which is equal to more than half of the Central American nation’s gross domestic product.
Lawmakers voted unanimously for the loan, which Finance Minister Rocio Aguilar said will save the government $13 million and help diminish financing needs in the local market as well as reduce pressure on interest rates.
The IDB loan has a 20-year term with a five-year grace period, Costa Rica’s office of the president said.
In an earlier effort to cut ballooning debt, Costa Rica in July approved the placement of up to $1.5 billion in bonds.
However, ratings agency Moody’s said on Tuesday, before lawmakers voted on the loan, that Costa Rica will see its debt keep growing.
“Persistent fiscal deficits will lead to a steady rise in the debt burden,” Moody’s said in a statement.
Writing by Daina Beth Solomon; editing by Christian Schmollinger