Obligation Costa Rica Verde 4.25% ( USP3699PGB78 ) en USD

Costa Rica Verde

100 % ▲

Costa Rica

USP3699PGB78 ( en USD )

4.25% par an ( paiement semestriel )

26/01/2023 - Obligation échue

Prospectus brochure de l'obligation Costa Rica USP3699PGB78 en USD 4.25%, échue

200 000 USD

1 000 000 000 USD

P3699PGB7

Le Costa Rica, situé en Amérique centrale, est un pays réputé pour sa biodiversité exceptionnelle, ses parcs nationaux luxuriants, ses plages tropicales et son engagement envers le développement durable.

L'obligation Costa Rica (ISIN : USP3699PGB78, CUSIP : P3699PGB7), émise au Costa Rica en USD pour un montant total de 1 000 000 000 USD avec une taille minimale d'achat de 200 000 USD, portant un taux d'intérêt de 4,25 % et échéant le 26/01/2023 avec des paiements semestriels, a atteint sa maturité et a été intégralement remboursée à un prix de marché de 100 %.

OFFERING CIRCULAR

The Republic of Costa Rica
US$1,000,000,000
4.250% Notes due 2023
The Republic of Costa Rica (the "Republic") is offering US$1,000,000,000 aggregate principal amount of
4.250% Notes due 2023 (the "Notes"). Interest on the Notes will be payable semi-annually in arrears on January 26
and July 26 of each year, commencing on July 26, 2013. The Notes will mature on January 26, 2023. The Notes are
not redeemable prior to maturity.
The Notes will constitute general, direct, unsecured and unconditional obligations of the Republic and will
rank pari passu in right of payment, without any preference among themselves, with all unsecured and
unsubordinated obligations of the Republic relating to Public External Indebtedness (as defined under "Terms and
Conditions of the Notes--Definitions") of the Republic. The Republic has pledged its full faith and credit for the
due and punctual payment of all amounts due in respect of the Notes.
The Notes will contain provisions, commonly known as "collective action clauses", regarding acceleration
and voting on future amendments, modifications and waivers. Under these provisions, which are described in the
sections entitled "Terms and Conditions of the Notes--Events of Default" and "--Modifications, Amendments and
Waivers", the Republic may amend the payment provisions of the Notes and certain other terms with the consent of
the holders of 75% of the aggregate amount of the outstanding Notes.
Except as described herein, payments on the Notes will be made without deduction for or on account of
withholding taxes imposed by the Republic to the extent set forth under "Terms and Conditions of the Notes--
Additional Amounts". Application has been made to list the Notes on the Official List of the Luxembourg Stock
Exchange and to have the Notes admitted to trading on the Euro MTF Market. This Offering Circular constitutes a
prospectus for the purpose of the Luxembourg Law dated July 10, 2005 on prospectuses for securities, as amended.
See "Risk Factors" beginning on page 8 regarding certain risk factors you should consider
before investing in the Notes.
Price: 99.989% plus accrued interest, if any, from November 21, 2012
The Notes have not been and will not be registered under the Securities Act of 1933, as amended (the
"Securities Act"). The Notes may not be offered or sold within the United States or to U.S. persons except to
qualified institutional buyers in reliance on the exemption from registration provided by Rule 144A under the
Securities Act and to certain persons in offshore transactions in reliance on Regulation S under the Securities Act.
You are hereby notified that sellers of the Notes may be relying on the exemption from the provisions of Section 5
of the Securities Act provided by Rule 144A under the Securities Act.
Delivery of the Notes will be made on or about November 21, 2012 only in book-entry form through the
facilities of The Depositary Trust Company ("DTC") and its direct participants, including Euroclear Bank
S.A./N.V., as operator of the Euroclear System ("Euroclear") and Clearstream Banking, société anonyme
("Clearstream"), against payment in New York, New York.
Joint Book-Running Managers
Citigroup
Deutsche Bank Securities

The date of this Offering Circular is November 16, 2012

Costa Rica

IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE REPUBLIC AND THE TERMS AND CONDITIONS OF THE OFFERING,
INCLUDING THE MERITS AND THE RISKS INVOLVED.
You should rely only on the information contained in this document or to which we have referred
you. We have not authorized anyone to provide you with information that is different. This document may
only be used where it is legal to sell these securities. The information in this document may only be accurate
on the date of this document.
This Offering Circular may only be used for the purposes for which it has been published.

________________

TABLE OF CONTENTS

NOTICE TO INVESTORS .......................................................................................................................................... ii
DEFINED TERMS AND CONVENTIONS ............................................................................................................... iii
FORWARD-LOOKING STATEMENTS ....................................................................................................................iv
ENFORCEMENT OF CIVIL LIABILITIES ................................................................................................................ v
OFFERING CIRCULAR SUMMARY ......................................................................................................................... 1
SELECTED ECONOMIC INDICATORS .................................................................................................................... 4
THE OFFERING ........................................................................................................................................................... 6
RISK FACTORS ........................................................................................................................................................... 8
USE OF PROCEEDS .................................................................................................................................................. 10
REPUBLIC OF COSTA RICA ................................................................................................................................... 11
THE COSTA RICAN ECONOMY ............................................................................................................................. 15
BALANCE OF PAYMENTS AND FOREIGN TRADE ............................................................................................ 35
MONETARY SYSTEM .............................................................................................................................................. 46
PUBLIC SECTOR FINANCES .................................................................................................................................. 63
PUBLIC SECTOR DEBT ........................................................................................................................................... 70
TERMS AND CONDITIONS OF THE NOTES ........................................................................................................ 78
PLAN OF DISTRIBUTION ........................................................................................................................................ 88
BOOK-ENTRY SETTLEMENT AND CLEARANCE .............................................................................................. 93
TRANSFER RESTRICTIONS .................................................................................................................................... 96
TAXATION ................................................................................................................................................................ 99
VALIDITY OF THE NOTES ................................................................................................................................... 104
GENERAL INFORMATION .................................................................................................................................... 105
_______________
NOTICE TO NEW HAMPSHIRE RESIDENTS
NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN
APPLICATION FOR A LICENSE HAS BEEN FILED UNDER CHAPTER 421-B OF
THE NEW HAMPSHIRE REVISED STATUTES WITH THE STATE OF NEW
HAMPSHIRE NOR THE FACT THAT A SECURITY IS EFFECTIVELY REGISTERED
OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE CONSTITUTES
A FINDING BY THE SECRETARY OF STATE THAT ANY DOCUMENT FILED
UNDER RSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY
SUCH FACT NOR THE FACT THAT THE EXEMPTION OR EXCEPTION IS
AVAILABLE FOR A SECURITY OR A TRANSACTION MEANS THAT THE
SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE MERITS OR
QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY
PERSON, SECURITY OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE
i

TO BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER OR CLIENT,
ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS
PARAGRAPH.
_____________________
NOTICE TO INVESTORS
The Notes will be issued in registered form only. Notes sold in offshore transactions in reliance on
Regulation S under the Securities Act ("Regulation S") will be represented by one or more permanent global notes
in fully registered form without interest coupons (the "Regulation S Global Note") deposited with a custodian for,
and registered in the name of a nominee of, The Depository Trust Company ("DTC") for the respective accounts at
DTC as such subscribers may direct. Notes sold in the United States to qualified institutional buyers (each a
"qualified institutional buyer") as defined in, and in reliance on, Rule 144A under the Securities Act ("Rule 144A")
will be represented by one or more permanent global notes in fully registered form without interest coupons (the
"Restricted Global Note" and, together with the Regulation S Global Note, the "Global Notes") deposited with a
custodian for, and registered in the name of a nominee of, DTC for the respective accounts at DTC as such
subscribers may direct. Beneficial interests of DTC participants (as defined under "Book-Entry Settlement and
Clearance") in the Global Notes will be shown on, and transfers thereof between DTC participants will be effected
only through, records maintained by DTC and its direct and indirect participants, including Euroclear and
Clearstream, if applicable. See "Book-Entry Settlement and Clearance". Except as described herein, definitive Notes
will not be issued in exchange for beneficial interests in the Global Notes. See "Terms and Conditions of the
Notes--Form, Denomination and Title". For restrictions on transfer applicable to the Notes, see "Transfer
Restrictions" and "Plan of Distribution".
The Republic has taken reasonable care to ensure that the information contained in this Offering Circular is
true and correct in all material respects and not misleading as of the date hereof, and that, to the best of the
knowledge and belief of the Republic, there has been no omission of information which, in the context of the issue
of the Notes, would make this document as a whole or any such information misleading in any material respect. The
Republic accepts responsibility accordingly.
This Offering Circular does not constitute an offer by, or an invitation by or on behalf of, the Republic,
Citigroup Global Markets Inc. ("Citigroup") or Deutsche Bank Securities Inc. (together with Citigroup, the "Initial
Purchasers") to subscribe to or purchase any of the Notes. Each recipient of this Offering Circular shall be deemed
to have made its own investigation and appraisal of the financial condition of the Republic. The distribution of this
Offering Circular or any part of it and the offering, possession, sale and delivery of the Notes in certain jurisdictions
may be restricted by law. Persons into whose possession this Offering Circular comes are required by the Republic
and the Initial Purchasers to inform themselves about and to observe any such restrictions. See "Plan of
Distribution" and "Transfer Restrictions" for a description of further restrictions on the offer, sale and delivery of
Notes and on distribution of this Offering Circular and other offering material relating to the Notes.
Each person purchasing Notes pursuant to Rule 144A will be deemed to have:
· represented that it is purchasing the Notes for its own account or an account with respect to which it
exercises sole investment discretion and that it or such account is a qualified institutional buyer (as
defined in Rule 144A); and
· acknowledged that the Notes have not been and will not be registered under the Securities Act or any
state securities laws and may not be reoffered, resold, pledged or otherwise transferred except as
described under "Transfer Restrictions".
Each purchaser of Notes sold outside the United States in reliance on Regulation S will be deemed to have
represented that it is not purchasing Notes with a view to distribution thereof in the United States. Each person
purchasing Notes pursuant to Rule 144A also acknowledges that:
ii

· it has been afforded an opportunity to request from the Republic and to review, and it has received, all
additional information considered by it to be necessary to verify the accuracy of the information
herein;
· it has not relied on the Initial Purchasers or any person affiliated with the Initial Purchasers in
connection with its investigation of the accuracy of the information contained in this Offering Circular
or its investment decision; and
· no person has been authorized to give any information or to make any representation concerning the
Republic or the Notes other than those contained in this Offering Circular and, if given or made, such
information or representation should not be relied upon as having been authorized by the Republic or
the Initial Purchasers.
IN CONNECTION WITH THIS ISSUE OF NOTES, EACH INITIAL PURCHASER MAY, ITSELF
OR THROUGH ITS AFFILIATES, OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE
OR MAINTAIN THE MARKET PRICE OF THE NOTES AT A LEVEL WHICH MIGHT NOT
OTHERWISE PREVAIL IN THE OPEN MARKET, TO THE EXTENT PERMITTED BY APPLICABLE
LAWS. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
DEFINED TERMS AND CONVENTIONS
All references in this Offering Circular to "Costa Rica" or the "Republic" are to the Republic of Costa Rica
and all references to the "Government" are to the Central Government of Costa Rica.
References to "billions" are to thousands of millions. Certain amounts included in this Offering Circular
have been subject to rounding adjustments; accordingly, figures shown as totals in certain tables may not be an
arithmetic aggregation of the figures which precede or follow them.
·
"Consolidated public sector deficit" means the aggregate of the Government fiscal deficit, the deficit
of the Banco Central de Costa Rica (the "Central Bank"), and the financial results of other
non¬financial public sector institutions.
·
"Government fiscal deficit" means the difference between the total expenses incurred by the
Government and the legislative and judicial branches of the Republic and the total revenues received
by the Government.
·
"Value added" in respect to exports means the difference between the value of final goods exported
and the value of the raw materials and intermediate goods used to produce the final goods exported.
·
"Non-traditional products" are products other than coffee, bananas, sugar and beef, and include non-
traditional agricultural products such as vegetables, fruits, roots, medicinal and decorative plants as
well as manufacturing, including light manufacturing and textiles.
·
Measures of distance herein are stated in miles, each of which is equal to approximately 1.609
kilometers, or kilometers ("km"). Measures of area herein are stated in square miles, each of which is
equal to approximately 2.59 square kilometers, or in hectares, each of which is equal to approximately
2.47 acres.
Presentation of Financial and Economic Information
The fiscal year of the Government commences on January 1 and ends on December 31 of each year.
The Republic's official financial and economic statistics are subject to a three-year review process by the
Central Bank and the Ministerio de Hacienda (the "Ministry of Finance"), during which time such information may
be adjusted or revised. As a result, the information and data contained in this Offering Circular for 2009, 2010 and
2011, and any figures for 2012, must be considered preliminary and subject to further revision. The Government
believes that this process is substantially similar to that undertaken by industrialized nations. The Government does
not expect revisions to be material, although there is no assurance that material changes will not be made.
iii

Certain statistical information reported herein has been derived from official publications of, and
information supplied by, among others, the Central Bank, the Ministry of Finance, the Institute Nacional de
Estadistica y Censos (the "National Institute of Statistics"), the Superintendencia General de Entidades Financieras
(General Superintendency of Financial Institutions, or "SUGEF") and the Superintendencia General de Valores
(Superintendency of Securities, or "SUGEVAL").
Currency of Presentation and Exchange Rate
Unless otherwise specified or the context requires, references to "dollars," "U.S. dollars," "US$" and "$"
are to United States dollars. References herein to "colones" and "¢" are to Costa Rican colones. Translations of
colones to dollars have been made only for the convenience of the reader at various exchange rates and should not
be construed as a representation that the amounts in question have been, could have been or could be converted into
U.S. dollars at any particular rate or at all. Historical amounts translated into U.S. dollars or colones have been
converted at historical average rates of exchange for the periods indicated, unless otherwise stated. References
herein to "real GDP" and to "constant colones" are to constant 1991 colones. The average interbank rate for the sale
of U.S. dollars for colones at the close of business on November 9, 2012 was 505.3 = US$1.00.
FORWARD-LOOKING STATEMENTS
This Offering Circular contains certain forward-looking statements (as such term is defined in the
Securities Act) concerning the Republic. These statements are based upon beliefs of certain government officials
and others as well as a number of assumptions and estimates which are inherently subject to significant
uncertainties, many of which are beyond the control of the Republic. Future events may differ materially from those
expressed or implied by such forward-looking statements. Such forward-looking statements are principally
contained in the sections "Offering Circular Summary", "Republic of Costa Rica", "The Costa Rican Economy",
"Balance of Payments and Foreign Trade", "Monetary System", "Public Sector Finances" and "Public Sector Debt".
In addition, in those and other portions of this Offering Circular, the words "anticipates", "believes",
"contemplates", "estimates", "expects", "plans", "intends", "projections" and similar expressions, as they relate to
the Republic, are intended to identify forward-looking statements. Such statements reflect the current views of the
Republic with respect to future events and are subject to certain risks, uncertainties and assumptions. The Republic
undertakes no obligation publicly to update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise. In light of these risks and uncertainties, there can be no assurances that the
events described or implied in the forward-looking statements contained in this Offering Circular will in fact occur.
iv

ENFORCEMENT OF CIVIL LIABILITIES
The Republic is a sovereign state. Consequently, it may be difficult for investors to obtain or realize in the
United States or elsewhere upon judgments against the Republic. To the fullest extent permitted by applicable law,
the Republic will irrevocably submit to the non-exclusive jurisdiction of any New York State or U.S. federal court
sitting in The City of New York, and any appellate court thereof, in any suit, action or proceeding arising out of or
relating to the Notes or the Republic's failure or alleged failure to perform any obligations under the Notes (a
"Related Proceeding," which term shall exclude claims or causes of action arising under the federal securities laws
of the United States or any state securities laws), and the Republic will irrevocably agree that all claims in respect of
any such Related Proceeding may be heard and determined in such New York State or U.S. federal court. The
Republic will irrevocably waive, to the fullest extent it may effectively do so, the defense of an inconvenient forum
to the maintenance of any Related Proceeding and any objection to any Related Proceeding whether on the grounds
of venue, residence or domicile. To the extent that the Republic has or hereafter may acquire any sovereign or other
immunity from jurisdiction of such courts with respect to a Related Proceeding (whether through service of notice,
attachment prior to judgment, attachment in aid of execution, execution or otherwise), the Republic has, to the
fullest extent permitted under applicable law, including the U.S. Foreign Sovereign Immunities Act of 1976, as
amended (the "Immunities Act") irrevocably waived such immunity in respect of any such Related Proceedings;
provided, however, that under the Immunities Act, it may not be possible to enforce in the Republic a judgment
based on such a U.S. judgment, and that under the laws of the Republic, the property and revenues of the Republic
are exempt from attachment or other form of execution before or after judgment. See "Terms and Conditions of the
Notes--Governing Law and Jurisdiction."
Notwithstanding the preceding paragraph, the Republic has not consented to service or waived sovereign
immunity with respect to actions brought against it under the U.S. federal securities laws or any state securities laws.
In the absence of a waiver of immunity by the Republic with respect to such actions, it would not be possible to
obtain a judgment in such an action brought in a U.S. court against the Republic unless such court were to determine
that the Republic is not entitled under the Immunities Act to sovereign immunity with respect to such action.
Further, even if a U.S. judgment could be obtained in any such action under the Immunities Act, it may not be
possible to enforce in the Republic a judgment based on such a U.S. judgment. Execution upon property of the
Republic located in the United States to enforce a U.S. judgment may not be possible except under the limited
circumstances specified in the Immunities Act.
v

OFFERING CIRCULAR SUMMARY
The following summary does not purport to be complete and is qualified in its entirety by, and is subject to,
the detailed information appearing elsewhere in this Offering Circular.
The Republic of Costa Rica
General
Costa Rica, which is located in Central America, is a stable constitutional democracy whose standard of
living ranks among the highest in Latin America. Costa Rica has had uninterrupted democratically elected
governments since 1949. In 2011, Costa Rica's gross domestic product ("GDP") was US$41.0 billion and its GDP
per capita was US$8,676, the highest in Central America according to the World Bank. In 2010, Costa Rica's GDP
was US$36.2 billion and GDP per capita was US$7,774. According to the United Nations Development Program's
2011 Human Development Report, the Republic is ranked fifth in Latin America on the Human Development Index,
a measure of quality of life based on longevity, educational attainment, economic index, and standard of living.
Costa Rica is geographically located in Central America, bordered by Nicaragua to the north, Panama to
the southeast, the Pacific Ocean to the west, and the Caribbean Sea to the east. The current President of Costa Rica,
Laura Chinchilla Miranda, is serving a four-year term which expires on May 8, 2014. Mrs. Chinchilla Miranda was
elected by popular vote in February 2010. See "Republic of Costa Rica--Government and Political Parties."
Costa Rica's Historical Highlights
Political, economic and social stability. The Government has continued to implement policies
designed to maintain political stability, promote economic growth and advance social
development. As a result of these policies, the country's economy has grown steadily at an
average rate of 5% over the last 10 years, the country has one of the lowest poverty rates in Latin
America at 21.6% of the population, health services have been provided to every citizen, and the
country has experienced uninterrupted democratically elected governments since 1949. As of
2012, approximately 52% of public expenditures are directed to social services.
Proven monetary policy. Since the mid-1980's, Costa Rica has continued to liberalize its
economy. Beginning in 2006, the Central Bank transitioned out of the crawling peg regime and
into a managed floating exchange regime with bands with the intention of maintaining inflation
within the Central Bank's target band of 4.0 to 6.0%.
Sound fiscal performance. In 2004, the Government implemented a fiscal consolidation process
that achieved a decrease of Government debt of 16 percentage points of GDP in 4 years, from 41%
of GDP in 2004 to 25% in 2008. In 2009, Costa Rica implemented an expansionary policy to
mitigate the effects of the global financial crisis. Since 2011, the Government has implemented
strict expenditure restraint policies. Through the combination of its income and expenditure
policies, the Government has contained the fiscal deficit at manageable levels.
Commitment to foreign trade and foreign investment. After the debt crisis in the early 1980s,
Costa Rica transitioned out of the import-substitution growth model into an export-led
development model based on international economic integration, export diversification and
foreign direct investment. These policies have enabled Costa Rica to diversify its trade portfolio
by destination and by products. Today, Costa Rica hosts a number of large international
companies, such as Intel, IBM, Proctor & Gamble, UPS and DHL. Costa Rica's literacy rate,
which is the highest in Central America, strong educational system, strategic geographic location,
and political, economic and social stability contribute to its global competitiveness in international
commerce.
Global pioneer in environmental awareness. Costa Rica is highly committed to sustainable
development, through two main initiatives: (a) becoming a carbon-neutral country by 2021 and (b)
maximizing its energy production through renewable sources. Today, 93% and 78% of electricity

1

comes from renewable and hydroelectric sources, respectively, and 25% of the territory in Costa
Rica is environmentally protected areas.
Commitment to education. Since the 19th century, elementary education in Costa Rica has been
mandatory and publicly funded. Beginning in 2014, the Constitution mandates that a minimum of
8% of GDP be invested in the education system, an increase from the current requirement of 6%
of GDP. The Government is also focused on improving secondary and tertiary education in order
to enhance the technical skills of the population to match demand for workers in the science and
technology fields.
Economic Performance and Diversification
Costa Rica's real GDP increased at an average annual rate of 3.7% from 2007 to 2011. Real GDP increased
by 4.7% in 2010, but slowed to 4.2% growth in 2011, primarily due to a decrease in economic activity in developed
countries.
During the past 25 years Costa Rica has diversified its economy as strong growth in the manufacturing and
tourism sectors have supplemented its historical production of agricultural goods. It has diversified its exports,
attracted investment in high value added manufacturing and promoted tourism based primarily on the country's
environmental diversity. The principal sectors of the Costa Rican economy are industrial manufacturing and high-
technology; wholesale and retail commerce and hotels and restaurants (which includes substantial proceeds from
tourism); agriculture, forestry and fishing; and community, social and personal services.
As a result of diversification, the composition of Costa Rica's exports has changed substantially, with
industrial exports increasing significantly. In 2011, industrial exports (including the value added by exports from
free trade zone and in-bond industries) represented approximately 77% of Costa Rica's total exports, while
agricultural exports represented approximately 23% of total exports. Free trade zone and in-bond industries are
commercial and industrial businesses that are located in designated "free trade" zones and that are entitled to certain
tax, fiscal, tariff and other benefits. In-bond industries are allowed to introduce goods into the country without
paying duties temporarily while the goods are subject to transformation processes, repair, reconstruction,
installation, assembly or incorporation into sets, machinery or transportation equipment and are ultimately exported.
Balance of Payments
At December 31, 2011, Costa Rica's capital account surplus exceeded its current account deficit, resulting
in a US$132.4 million increase in the Central Bank's net international reserves. Net international reserves of the
banking system stood at US$4.7 billion at December 31, 2011, representing the equivalent of approximately 4.9
months of imports. At December 31, 2010, Costa Rica's capital account surplus exceeded its current account deficit,
resulting in a US$561.1 million increase in the Central Bank's net international reserves, which stood at US$4.6
billion at December 31, 2010, representing approximately 3.5 months of imports.
Historically, Costa Rica was significantly dependent on the export of four traditional agricultural goods
(coffee, bananas, sugar and beef). Today, the country exports over 3,000 different products. The number of
agricultural goods sold abroad, such as watermelons, pineapples, melons, potatoes and ornamental plants, has
increased. In addition, Costa Rica is exporting high-technology products, such as computers, medicines and medical
equipment, and services provided by shared services centers, which together accounted for approximately 12% of
Costa Rica's total exports for 2011.
Costa Rica has also diversified the geographic markets to which it exports. Its exports are directed to
approximately 130 countries around the world. In 2011, approximately 38.1% of Costa Rica's exports were sent to
the United States, 17.9% to the European Union, 14.3% to Central America, 11.7% to Asia, 4.7% to the Caribbean,
2.5% to South America, and 10.8% to various other countries. Costa Rica's foreign trade depends largely on the
United States, the European Union and other Central American economies, given that approximately 82.6% of its
exports go to these areas.
Monetary Policy
Costa Rica's inflation rate was 13.9% during 2008, primarily as a result of increases in international
commodity prices in the first half of the year. As a result of the slowdown in the Costa Rican economy that occurred

2

following the global financial crisis that began in the fourth quarter of 2008 and the decrease in commodity prices in
2009, the inflation rate declined to 4.0% in 2009. The inflation rate increased to 5.8% during 2010, primarily due to
the rise in the international prices of oil and food and a rebound of economic activity. The inflation rate decreased to
4.7% during 2011, within the Central Bank's target band of 4.0 to 6.0%, primarily because of a decline in the
international price of oil.
Costa Rica's currency, the colón, depreciated by 9% in 2008 to 550.1 colones to US$1, primarily due to the
global financial crisis. In 2009, as the global financial crisis intensified, the exchange rate depreciated by 9% to
558.7 colones to US$1. In 2010, the exchange rate appreciated by 8.3% to 525.8 colones to US$1, mainly as a
result of the improvement in the financial account of the balance of payments and an acceleration of foreign direct
investment. In 2011, the exchange rate remained relatively stable at an average of 505.7 colones to US$1, close to
the lower limit of the exchange-rate target band 500 colones per US$1.00 set by the Central Bank.
Fiscal Policy
At December 31, 2011, the Government's fiscal deficit totaled US$1.7 billion, or 4.1% of GDP. At
December 31, 2011, the consolidated public sector deficit, excluding the Central Bank deficit, reflected total
expenditures of US$15.4 billion and revenues of US$13.9 billion. As of June 30, 2012, the Government registered a
deficit equal to US$962 million, equivalent to 2.1% of estimated annual GDP. The Government deficit as of June
30, 2012 reflected total revenues of US$3.1 billion and total expenditures of US$4.0 billion.
The Government is implementing a comprehensive fiscal strategy to further increase competitiveness,
including: (a) executing strict policies to restrain current expenditures by limiting government hiring and limiting wage
increases to match expected inflation; (b) safeguarding public investment and social spending through productive
investment projects using innovative financing, and enacting measures to maintain current levels of social expenditure;
(c) strengthening the fight against tax evasion, tax elusion and contraband, increasing fiscal transparency and training
judges and prosecutors to better understand and fight tax crimes; (d) expanding financing options for the Government
with the goal of expanding its investor base and lowering borrowing costs; and (e) encouraging a national dialogue with
all stakeholders to reach a consensus on ways to strengthen the finances of the public sector.
Public Debt
Government debt reached US$7.0 billion in 2008 (24.7% of GDP), US$8.2 billion in 2009 (27.2% of GDP),
US$10.9 billion in 2010 (29.2% in 2010) and US$12.5 billion in 2011 (30.9% of GDP). Government debt increased
from 2008 to 2011 mainly due to an expansion of the fiscal deficit as the Government pursued an expansionary fiscal
policy to mitigate the effects of the global financial crisis that started in the fourth quarter of 2008 and to support the
Government's growth strategy. Government debt contributed the largest share to total public sector debt, averaging
65.2% of total debt over the period from 2008 to 2011.

3