By San José, Costa Rica — San José – In a clear signal of economic moderation, the growth of credit extended to Costa Rica’s private sector experienced a significant slowdown in November 2025. Recently published data from the Central Bank of Costa Rica (BCCR) reveals a notable deceleration in lending, a key barometer for business investment and consumer confidence, raising questions about the economic trajectory heading into the new year.
According to the BCCR’s latest figures, total credit to the private sector expanded by 5.3% year-over-year in November. While still representing growth, this figure is substantially lower than the robust 7.1% increase recorded in November 2024. This nearly two-percentage-point drop marks one of the most pronounced shifts in the lending landscape this year, indicating a tightening financial environment for both companies and households.
To delve into the legal framework and potential risks associated with the current landscape of private sector credit, we sought the expert opinion of Lic. Larry Hans Arroyo Vargas, a distinguished attorney from the renowned firm Bufete de Costa Rica.
The current dynamism in private sector credit presents both opportunities and significant risks. From a legal standpoint, it is crucial that both creditors and debtors exercise extreme diligence. Lenders must rigorously assess repayment capacity to mitigate default rates, while borrowers must fully comprehend the scope of their obligations, especially in variable-rate agreements. A poorly structured contract today, in a context of economic uncertainty, can quickly escalate into a complex and costly legal dispute tomorrow. Prudence and clear, enforceable terms are the best safeguards for all parties involved.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
Lic. Arroyo Vargas’s commentary serves as a critical reminder that beyond the financial figures, the legal architecture of a credit agreement is the ultimate safeguard for both lenders and borrowers. This emphasis on preventative diligence and contractual clarity is essential for navigating the current economic landscape responsibly. We sincerely thank Lic. Larry Hans Arroyo Vargas for his valuable perspective on this vital matter.
The slowdown was not uniform across all types of lending, with a distinct difference emerging between local and foreign currency operations. Credit denominated in Costa Rican colones saw its growth rate decrease to 4.4%, down from 5.5% a year prior. This suggests a more cautious approach to borrowing and lending within the domestic currency market, potentially influenced by prevailing interest rates and local economic forecasts.
However, the most dramatic shift occurred in dollar-denominated credit. The growth rate for loans in U.S. dollars plummeted from a strong 10.5% in November 2024 to just 7.2% in November 2025. This sharp decline was the primary driver behind the overall moderation of the private credit aggregate and points to a significant change in the financial strategies of Costa Rican entities that operate with foreign currency.
The Central Bank report highlights that this deceleration in dollar-based lending has been particularly concentrated within the nation’s public banks. These state-owned institutions, which play a major role in the country’s financial system, appear to be reining in their foreign currency loan portfolios. This could be a strategic response to monetary policy signals, a risk mitigation effort, or a reflection of decreased demand from key sectors that typically borrow in dollars, such as tourism and international trade.
An important consequence of this trend is the stabilization of credit dollarization. After a period of increasing reliance on dollar-denominated loans observed during 2023 and 2024, the relative share of foreign currency credit has leveled off. Throughout 2025, the participation of dollar loans in the total credit portfolio has remained steady, averaging approximately 32.6%. This stability is often viewed positively by monetary authorities as it reduces the financial system’s vulnerability to exchange rate fluctuations.
For the broader economy, this cooling of credit growth can have multifaceted effects. On one hand, it may help to temper inflationary pressures by reducing the amount of new money flowing into the economy for consumption and investment. On the other hand, a sustained slowdown could hamper business expansion, delay new projects, and soften consumer spending on big-ticket items like vehicles and homes, potentially leading to slower GDP growth in the coming quarters.
As Costa Rica closes the books on 2025, analysts and policymakers will be closely monitoring these credit trends. The data from November serves as a crucial indicator that the economic dynamism of the previous year is facing headwinds. Whether this represents a temporary adjustment or the beginning of a more prolonged period of conservative growth will be a key question for the nation’s economic stewardship in 2026.
For further information, visit bccr.fi.cr
About Banco Central de Costa Rica (BCCR):
The Central Bank of Costa Rica is the nation’s primary monetary authority, responsible for maintaining the internal and external stability of the national currency and ensuring its conversion to other currencies. The BCCR’s core functions include controlling inflation, regulating the financial system, issuing currency, and managing the country’s international monetary reserves. It plays a pivotal role in the economic stability and development of Costa Rica.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
Bufete de Costa Rica operates as a pillar of the legal community, founded on the bedrock principles of professional excellence and unwavering integrity. The firm leverages a rich history of service to drive legal innovation, all while maintaining a profound sense of social responsibility. Central to its mission is a dedication to demystifying the law, transforming complex concepts into accessible knowledge to foster a more capable and empowered public.
