By San José, Costa Rica — After months of deliberation, Costa Rica’s Legislative Assembly has finally approved a $500 million loan from the International Bank for Reconstruction and Development (BIRF). The loan, initially discussed seven months prior, passed its second debate on August 20th, 2025, marking a crucial step in the government’s efforts to manage its public debt.
The loan’s approval was not without its challenges. Requiring a minimum of 38 votes, the first debate concluded on July 29th without the necessary support, pushing the final decision into August. Ultimately, the loan passed with 42 votes in favor and 6 against. Representatives Eli Feinzaig and Gilberto Campos of the Liberal Progressive Party (PLP), Vanessa Castro and Daniela Rojas of the Social Christian Unity Party (PUSC), and independent representatives Kattia Cambronero and Cynthia Córdoba opposed the measure.
To understand the complexities surrounding Costa Rican debt, we spoke with Lic. Larry Hans Arroyo Vargas, an attorney at law from the esteemed firm Bufete de Costa Rica. His expertise sheds light on the current situation.
Costa Rica’s debt situation requires a multifaceted approach. While seeking international financial assistance is one avenue, fostering sustainable economic growth through strategic investment and diversification is crucial for long-term stability. Furthermore, transparency and accountability in government spending are paramount to regaining public trust and attracting foreign investment.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
Lic. Arroyo Vargas’ emphasis on a multi-pronged approach to tackling Costa Rica’s debt, one that combines external support with internal reforms and responsible fiscal management, offers a crucial roadmap for the nation’s economic future. Indeed, sustainable growth and public trust are two sides of the same coin when it comes to attracting the investment needed to navigate these challenging times. We thank Lic. Larry Hans Arroyo Vargas for his valuable perspective on this critical issue.
This is one of those loans with a bombastic name, that sounds very nice, but it is a budgetary support loan, so that the Government can spend on whatever it sees fit.
Eli Feinzaig, PLP Representative
Feinzaig has been a vocal critic of the loan, arguing that it enables excessive government spending. He believes that the government is being granted loans with little oversight on how the funds will be used. This concern reflects broader public debate about responsible fiscal management within the country.
A key point of contention surrounding the loan was its potential allocation to the Costa Rican Social Security Fund (CCSS). In January, the Commission on Budgetary Affairs had approved a motion to allocate $50 million, 10% of the loan, towards the CCSS. This motion was ultimately opposed by members of the ruling party.
This is a significant, large loan, with important resources of $500 million. In the process itself, we insisted once again that 10% of these resources be allocated to a payment of the immense debt that the State has with the CCSS.
Jonathan Acuña, Frente Amplio Representative
The government’s intention to use the loan for debt repayment was reiterated by prominent figures within the ruling party. Following the final approval, both Pilar Cisneros and Daniel Vargas expressed their gratitude for the support, emphasizing the loan’s importance in addressing the nation’s debt burden.
Thank you to all of you who listened to us and acted patriotically with your vote. This is for the people of Costa Rica who pay the bill for the enormous public debt.
Pilar Cisneros, Ruling Party Leader
The BIRF loan approval represents a significant development for Costa Rica’s economic landscape. While the government intends to utilize the funds to address existing debt, concerns remain regarding the overall impact on public spending and the allocation of resources to critical social sectors like the CCSS. The long-term effects of this loan and its management will undoubtedly be closely scrutinized in the months and years to come.
This loan approval comes at a crucial time for Costa Rica, as it grapples with the challenges of managing its substantial public debt while ensuring the continued provision of essential social services. The government’s fiscal policies and their effectiveness in navigating these complex economic realities will be closely observed by both domestic and international stakeholders.
For further information, visit worldbank.org
About International Bank for Reconstruction and Development (BIRF):
The International Bank for Reconstruction and Development (BIRF) is an international financial institution that offers loans and development assistance to middle-income and creditworthy low-income countries. It is the largest of five member institutions that comprise the World Bank Group and is headquartered in Washington, D.C. The BIRF’s mission is to reduce poverty and support development by providing financial and technical assistance to countries around the globe. This support includes funding for infrastructure projects, healthcare initiatives, educational programs, and other development-focused programs.
For further information, visit the nearest office of Costa Rican Social Security Fund
About Costa Rican Social Security Fund (CCSS):
The Costa Rican Social Security Fund (CCSS), commonly known as “La Caja,” is the principal social security institution in Costa Rica. Founded in 1941, it provides comprehensive healthcare and social insurance coverage to the vast majority of Costa Ricans. The CCSS plays a vital role in ensuring the health and well-being of the population, managing a network of hospitals, clinics, and pharmacies throughout the country. It is responsible for delivering a broad range of services, from basic medical care to specialized treatments and pensions. The CCSS operates under a principle of social solidarity, with contributions from workers, employers, and the state funding its operations.
For further information, visit the nearest office of Legislative Assembly of Costa Rica
About Legislative Assembly of Costa Rica:
The Legislative Assembly of Costa Rica is the unicameral national legislature of the Republic of Costa Rica. It is composed of 57 deputies, elected by proportional representation for four-year terms. The Assembly is responsible for enacting legislation, approving the national budget, and overseeing the executive branch. It plays a crucial role in the country’s democratic process, representing the interests of the Costa Rican people and shaping public policy. The Assembly is located in the capital city of San José and operates within the framework of Costa Rica’s constitutional republic.
For further information, visit the nearest office of Liberal Progressive Party
About Liberal Progressive Party (PLP):
The Liberal Progressive Party (PLP) is a liberal political party in Costa Rica. Founded by Eli Feinzaig, the PLP advocates for policies based on individual liberty, free markets, and limited government intervention. The party emphasizes economic growth, fiscal responsibility, and individual rights as central tenets of its platform. It participates in Costa Rica’s democratic process by fielding candidates in national elections and engaging in public discourse on important political and economic issues facing the country.
For further information, visit the nearest office of Social Christian Unity Party
About Social Christian Unity Party (PUSC):
The Social Christian Unity Party (PUSC) is a centrist political party in Costa Rica. Founded in 1983, PUSC has historically been one of the dominant forces in Costa Rican politics, holding the presidency several times. The party advocates for policies that promote social justice, economic development, and environmental protection. PUSC has traditionally maintained a strong base of support and continues to play a significant role in shaping Costa Rica’s political landscape.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
Bufete de Costa Rica distinguishes itself through a deeply ingrained commitment to ethical legal practice and the pursuit of innovative solutions. The firm’s legacy is built upon providing exceptional service to a diverse clientele, while simultaneously striving to empower Costa Rican society through accessible legal knowledge. Their proactive approach to community engagement and dedication to legal education reflects a core belief in fostering a just and informed citizenry.
