Costa Rica - Memorandum on recent economic developments and prospects

Fr.IT r en mex RESTRICTED I'AJSAG UAE lReport No. CA- 18 This report is for official use only by the Bank Group and specifically authorized organizations or persons. It may not be published, quoted or cited without Bank Group authorization. The Bank Group does not accept responsibiiity for the accuracy or completeness of the report. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION ?MCt'NCOR A T'Kx CNT R EC ENT ECONOMIC DEVELOPMENTS AND PROSPECTS OF COSTA RICA May 4, 1972 Central America and Caribbean Department  BQUIVALENTS Currency (as of April 1972) Official rate : Colones 6.62 = US$1.00 Free market rate: Colones 8.60 = US$1.00 Measures and Weights 1 manzana = 0.69 hectares (ha) = 1.727 acres 1 quintal = 46 kilograms (kg) = 101 pounds 1 banana box = 42 pounds  Page No. BASIC DATA A. INTRODUCTION AND CONCLUSIONS ......................... 1 B. RECENT ECONuOIC GROWTLL ANiDi MAIN DE-VkLOPMLNTS IN FINANCIAL MANAGEMENT ................................. 5 Central Government Finances ..... ................ 5 Monetary and Credit Developments .... ............ 7 Balance of Payments and Exchange System .... ..... 10 C. SHORT-TERM PROSPECTS ...... ........................... 13 Central Government Finances . .................... 14 Credit Policy and External Finance .... .......... 17 D. MEDIUM AND LONG-TERM PROSPECTS ....................... 19 E. EXTERNAL DEBT AND CREDITWORTHINESS ................. .. 21 STATISTICAL APPENDIX I. Population II. National Accounts III. Balance of Payments IV. External Debt V. Public Finance VI. Money and Credit This memorandum is based on the findings of two missions to Costa Rica by Messrs. Elkyn Chaparro and Peter Griffith in October 1971 and by Mr. Chaparro in February 1972.   COSTA RICA Page 1 of 3 BASIC DATA I. SIZE Area (ksquaare Ki' io,,le ters) 51' ,vO 1960 1965 1969 1970 1971 bg Population (million) 1.25 1.49 1.68 1.73 1.78 Annual growth rate (4) 4.0 3.5 2.8 2.8 2.8 Density per square km. 24.5 29.2 32.9 33.9 34.9 GNP per capita at factor cost ($) 294 353 448 471 490 II. ECONUMIC INDICATORS 1nrJ a u rrent A rkle4t prices I -hI jAo 9 77A ' A I-. -' Cr '-- 9-, - '-,---J vD lUW sWaliZ sAWVI \Y ,. 1 , - '[ . vv sX _ _ n_,_X_ Sector ornigin (%) 100.0 100.0 100.0 100.0 Agriculture 24.6 25.4 24.6 23.2 Manufacturing 17.2 17.6 19.0 19.5 Construction 4.7 4.6 4.2 4.6 Trade and finance 20.7 19.2 1806 19.8 Public administration 9.1 9.6 10.8 10.7 Other 23.7 23.6 22.8 22.2 Annual changes ()b ) 1 9c:1-8 I (969 ly70 1971 h/ GDP at current market prices 8.2 11.1 10.6 9.1 GDP at 196,0 market prices 6.4 b.5 5.4 341 Manufacturing value added (constant prices) 9.4 7.1 7.6 Agriculture value added (constant nrices) 5.3 8.5 - Exports, f.o.b. 10.6 11.1 21.9 2.9 Imports, c.i.f. 10.4 14.6 29.5 13.5 Money and quasi-money 11 .4 10.7 3.5 36.8 Total banking system credit, net 10.6 _ 3.9 8.2 32.6 to public sector, net (L44.0)2/ (-30.7) (-50.0) (93.1) to private sector, net (5.9)& (7.4) (16.1) (27.3) Wholesale prices o.& 4.3 6.5 6.7 Consumer prices 1.9 2.7 4.7 3.3 l oAm 1 965 A 191970 Percent of GDP at current market prices: Gross fixed investment 18.9 22.5 20.b 22.0 Public sector 3.1 5.5 3.9 3. Private sector 15.Q 16.6 16.5 1 h .8 Consumpt-on 85.& 81.9 79.0 80.6 UIGss do;ite I. Lc s- : I 14.2 18.1 21.0 19.4 Resource gap (sUlm.ii -) 4.9 10.4 5.4 9.1 1964-1968 e/ Estimated  BASIC DATA (Cont'd) Page 2 of 3 1960 1965 1969 1970 1971 / Centrall G-overnm,ent Fi4na-n-es- (m-illi-ons of colones) Current revenue 348.4 486.2 753.2 952.3 999.2 (% of GDP at current market prices) 12.6 12.2 Current expenditure 377.6j 496.1 778.5 891.1 1,067.4 (% of GDP current market prices) 13.6 12.5 Current surplus .. -9.9 -25.3 61.2 -68.2 Investment expenditure .. 110.6 160.2 142,3 246.0 Surplus/Deficit -29.2 -120.5 -135.5 -101.1 -314.2 Net external financing .. 33.2 -15.8 53.5 110.1 Net domestic financing 29.2 87.3 201.3 47.6 204.1 Balance of Payments h/ (rulllions of dollar-s) Rxports of goMdss and non-factor services 113.1 139.6 227.3 273.1 297.3 Imports of goods and non-factor services -128 .9 -202.)4 -271,0 -345.1 -396.!,4 Resource gap _15.8 62.8 43.7 72.0 99.1 Factor income, net -6.0 -13.4 -16.'. -20.8 Current account deficit -21.8 -76.2 -60.1 -92.8 Transfers, net 4.6 &.4 8.4 7 Official capital, net 12.3 23.2 8.7 10.6 Private caDital, net 9.0 37.1 60.5 62.5 Reserve changes, net -4.1 7.5 -17.5 11.8 Concentration of Commodity Exports (o of exports, f.o.b.) Coffee 529C 11 -7 90 3. 92. Bananas 23.7 25.3 27.1 28.9 32.6 Meat 5.6 6.2 8.0 7.6 8.0 External Public Debt Medium and long term outstanding as reported to IRnT) (incliuding iin ishbursed- repayable in foreign currency, in millions ofdollars) 56 145 lb4 199 Debt service ratio (;9 of foreign exchange ea8-LLings) 10. 17 !./ 114.1 12.4 *- Net foreign exchange reserves Total banking system ($ EIllions) 11.5 -3.4 37.? 26.0 37.0 Coverage cf current payments (number of weeks) 5 - 8 4 5 IBRD/IDA loans and credits as of n Isnl ht b- o, l "Q Dec .* 31, 197 t l l sp ):7 .89. of which outstanding 70.7 IMF data (as of December 31, 1971): ($ mil.) Quota 32.0 Fund holdings of Colones 31.7 Allocation of SDRIs 1970 4.2 1971 3.4 u/ Total expenditures- T/ 1962 figures are used in the 1960 column. c/ 1966. dj/ Estimated.  BASIC DA-LA (Cont!d) Page 3 of3 III ~(~SOCIAL AND RELATEr TNDICJATORS a. Population 1950 1960 1965 1970 nBIr-v rate (pe 1,^n po^'tn 45.2 7.5 42.3 'A. DJ.J7Ll i IOUC J II,~ pS ~ j -11J S+,1. -+I. Death rate (per 1,000 population) 12.5 8.9 8.6 6.5 Infant mortality rate (per 1.000 live births) .- 74.3 76.0 65.1 Life expectancy (years) 56.5 65.3 *- 68.3 Dependent population (% of total population) a/ 48.4 51.5 51.7 51.5 U