The Ministry of Treasury and the Central Bank of Costa Rica resorted to treasury bills to finance expenses such as salaries, pensions, social programs and debts this as a result of the impossibility to place bonds.

This is an emergency measure used to face the critical financial moment the country is facing and gain time while the fiscal reform is approved by the Legislative Assembly; this financial instrument has not been used since 1994.

The total amount placed by the government is of $860,718,300.00 USD (498 billion colones) equivalent to 5% of the 2018 National Budget); treasury bills consist on temporary “loans” issued by the Central Bank to the Executive Branch for a short term, in this particular case only 90 days and with a rate of 5.75%. In other words, the Ministry of Treasury places the bills that are then acquired by the Central Bank to finance the expenses of the Government.

Rodrigo Cubero, President of the Central Bank stated that he is certain that this measure will not result in an increase in the cost of life (inflation) because it’s a temporary measure that should be reversed in 90 days.

“The afternoon of this Tuesday, the Board of Directors of the Costa Rican Central Bank (BCCR), made the decision of buying the treasury bills issued by the Government. This is a temporary measure, there are three limitations established by law: a maximum term of 90 days, a minimum interest rate of no less than the passive basic rate, and the amount can not exceed a twentieth of the current National Budget”, explained Cubero.

Rocio Aguilar, Minister of Treasury affirmed that there is commitment by the Treasury to make the payment based on a series of financial operations that are already executed.