Arias Announces Debt Relief Accord for Costa Rica
SAN JOSE, Costa Rica (AP) _ A joyful Costa Rican President Oscar Arias thanked President Bush on Friday for the U.S. role in restructuring Costa Rica’s foreign debt in ways expected to save his country $100 million a year.
Arias announced the debt restructuring at an airport welcoming ceremony for Bush, who arrived for a two-day meeting with hemispheric leaders.
Arias said the agreement would reduce Costa Rica’s $4.5 billion foreign debt by $1 billion. The annual cost of paying interest on the debt will be reduced from $150 million to $50 million.
″This is the best possible gift we can possibly make to the future generations of Costa Ricans,″ Arias said.
″For our neighbors in North America, $1 billion isn’t much, but for us down here in Costa Rica, that’s all the money in the world,″ he said.
With a population of only 2.7 million, Costa Rica has had one of the highest per capita foreign debts in the world.
Arias praised his country’s economic officials who had engaged in months of negotiations with international bankers in Washington, and thanked ″the U.S. government, who gave us so much assistance within the framework of the Brady plan.″
The Brady plan is the initiative that Treasury Secretary Nicholas Brady announced last March for helping reduce the crushing $1.3 trillion debts of Third World nations.
Arias said that without the support of Bush, Brady and Treasury Undersecretary David Mulford, ″it would be very unlikely that we would have been able to give you this wonderful news today, news which will allow Costa Rica to develop faster in the years to come.″
The Costa Rican pact is the third announced under the Brady initiative. Previous agreements have been reached with Mexico and the Philippines.
In Washington, Brady said in a statement that the agreement would ″provide important support for Costa Rica’s economic reform program″ and ″represents an important step forward″ in easing the debts of developing countries.
The agreement provides funds for repaying part of the Costa Rican debt will come from the International Monetary Fund, the World Bank and several governments, including the United States.
Costa Rica owed $1.6 billion to private commercial banks and the rest to other governments, the IMF and other international institutions.
Fabian Barrantes, a spokesman for Arias, said it was the debt to commercial banks that was renegotiated. The country had owed $325 million in past due interest payments alone. The agreement sharply reduces debt service payments over the next several years.
Costa Rica will buy back much of the bank debt for less than 20 cents on the dollar, and issue bonds paying 6.25 percent interest to clear up other debts.