Costa Rica : FY 1987 economic stabilization and reform (ESR) VI (515-0231) ESF PAAD

The program and the ongoing policy dialogue will consolidate previous policy reforms and encompass new or expanded dialogue on other policies; it is also supportive of planned or possible agreements with the IMF, World Bank, Paris Club, and commercial banks. Dollar funds will be used to finance private sector imports from the United States of eligible raw materials, intermediate goods, construction materials, capital equipment, and spare parts. Local currency generations will be used to finance development activities including credit for the private sector, agribusiness development, a low-income housing bank, privatization/divestiture, and reduction of the Central Bank"s domestic debt. The agreement is dependent on continued fulfillment of existing covenants relating to exchange rates, interest rates, domestic credit, and privatization, and of new covenants regarding banking reform, public sector employment, and export promotion. Funds will be disbursed in two tranches depending upon progress towards achieving macroeconomic targets such as GOCR expenditures, banking system credit, Central Bank assets, foreign exchange reserves, external debt arrears, or other measures to be considered. Of the $85 million allocated for the program, only $84.85 million is authorized in the PAAD. The remaining S$150,000 is being reserved for use by CADO (unidentified acronym), but if not needed by that organization, will be obligated later. Amendment of 8/28/87 authorizes $34.75 million in Supplemental FY87 funds, as well as the $150,000 which had been reserved for CADO. (PD-KAJ-840)