Raised interest rates to protect currency reserves in second half, 1998. Has had crawling peg since 1993. Goal of exchange-rate policy is to revalue the Colon according to internal price changes. Costa Rica undertook several adjustment programs with the IMF and the World Bank during the past decade, as well as five Paris Club arrangements and a Brady debt buy-back scheme in 1989. Largely because of these past programs, foreign currency reserves, balance of payments considerations, and exchange rates do not currently raise serious concerns for the multilateral lending institutions.
Large debt is primary concern of lenders.
No foriegn banking allowed, demand deposits only allowed in private banks since 1995. Large remittances offset trade deficit. Prudent debt policies have given debt good rating with Moody's and Standard and Poor's. No restrictions on foriegn bank entry. Central banks restrictive policy have resulted in high lending rate.