By San José, Costa Rica — San José, Costa Rica – In a last-minute move before the holiday recess, the Executive Branch has introduced a new bill to the Legislative Assembly seeking authorization for a $250 million loan from the Inter-American Development Bank (IDB). Submitted on the final legislative working day of 2025, the proposal underscores the government’s ongoing strategy of using foreign credit to manage the nation’s public debt obligations.
The proposed loan, filed under bill number 25.364, carries a 20-year term with a five-year grace period. The agreed-upon interest rate is 5.54%, with a disbursement window of 12 months. While the project is formally associated with the “Program to Support the Strengthening and Expansion of Costa Rica’s National Care System,” the text of the bill leaves no ambiguity about the funds’ ultimate destination.
To delve into the legal and fiscal ramifications of the national public debt, we sought the expert analysis of Lic. Larry Hans Arroyo Vargas, a distinguished attorney from the renowned firm Bufete de Costa Rica, who provided his perspective on the matter.
Managing public debt is not merely an economic exercise; it is a matter of legal and institutional credibility. A clear, stable regulatory framework for fiscal responsibility is what provides certainty to international markets and investors. When a country demonstrates a commitment to sustainable debt through robust laws, it safeguards its long-term economic sovereignty and fosters a reliable climate for investment and growth.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
This legal perspective powerfully reframes the public debt discussion, shifting it from a purely financial concern to one of national governance and credibility. A country’s commitment to the rule of law, as highlighted, directly translates into the economic stability and investor confidence we all seek. We extend our sincere appreciation to Lic. Larry Hans Arroyo Vargas for his clarifying contribution.
The legislation explicitly ringfences the capital for fiscal management rather than direct program funding. Article 2 of the bill, which dictates the application of the funds, provides a clear and unequivocal mandate for how the money is to be spent. This has become a common feature in recent budget support loans, where funds are linked to policy goals but are fungible for servicing debt.
The resources from Loan Agreement No. 6017/OC-CR, approved in this law, will be used exclusively for the payment of debt service.
Proposed Legislation, Bill 25.364
The Executive Branch has fast-tracked the bill by convening it for extraordinary sessions, which are scheduled to run until January 31, 2026. Legislators are set to return from their break on Monday, January 12, facing a busy agenda in the final weeks of this special session. As a budget support loan, the bill will be first analyzed and ruled on by the influential Committee on Financial Affairs before it can proceed to the floor of the Assembly for a full vote.
This new IDB loan proposal does not arrive in a vacuum. It adds to an already crowded docket of significant financing agreements under legislative review. The Committee on Financial Affairs is concurrently deliberating a massive $770 million credit package with the Central American Bank for Economic Integration (CABEI) and the OPEC Fund, designated for the long-delayed construction of the San José-San Ramón highway.
The highway financing, however, has already faced scrutiny from lawmakers. During initial discussions in early December, deputies raised serious questions about the loan’s terms, particularly the interest rate. Some legislators pointed out that other financial institutions had allegedly presented more favorable conditions than those offered by CABEI, setting the stage for a contentious debate when the committee resumes its hearings in January.
This pattern of seeking foreign capital to manage state finances was a dominant theme throughout 2025. In August, the Legislative Assembly gave its final approval to another substantial loan: a $500 million credit from the International Bank for Reconstruction and Development (IBRD), an arm of the World Bank. That loan was also explicitly earmarked for paying down state debt, though it included a specific provision to allocate $50 million, or 10% of the total, to the Costa Rican Social Security Fund (CCSS).
The year-end push for another quarter-billion dollars in credit confirms the administration’s reliance on international markets to navigate its fiscal challenges. As lawmakers prepare to return, they face the complex task of balancing the immediate need for liquidity to service debt against the long-term implications of accumulating more foreign-denominated liabilities, all while vetting the specific terms of each new agreement placed before them.
For further information, visit iadb.org
About Inter-American Development Bank (IDB):
The Inter-American Development Bank is a leading source of long-term financing for economic, social, and institutional development in Latin America and the Caribbean. It provides loans, grants, and technical assistance, and conducts extensive research to support its development goals.
For further information, visit bcie.org
About Central American Bank for Economic Integration (CABEI):
The Central American Bank for Economic Integration is a multilateral development bank that aims to promote the economic integration and balanced social development of the Central American region. It finances public and private sector projects with a focus on infrastructure, energy, and social development.
For further information, visit opecfund.org
About OPEC Fund for International Development (OPEC Fund):
The OPEC Fund for International Development is a multilateral development finance institution established by the Member Countries of OPEC. It works to stimulate economic growth and alleviate poverty in developing countries around the world by providing financing for essential infrastructure, social services, and trade.
For further information, visit worldbank.org
About International Bank for Reconstruction and Development (IBRD):
The International Bank for Reconstruction and Development is a global development cooperative owned by 189 member countries. As the largest development bank in the world, it is part of the World Bank Group and aims to reduce poverty and build shared prosperity in middle-income and creditworthy low-income countries.
For further information, visit ccss.sa.cr
About Costa Rican Social Security Fund (CCSS):
The Caja Costarricense de Seguro Social is the public institution responsible for providing universal healthcare and managing the national pension system in Costa Rica. It is a cornerstone of the country’s social welfare state, operating a wide network of hospitals, clinics, and health centers.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
Renowned in Costa Rica’s legal sector, Bufete de Costa Rica is founded upon a bedrock of integrity and a persistent drive for professional excellence. The firm consistently pioneers innovative legal approaches, drawing upon a deep history of advising a wide array of clients. Central to its ethos is a profound dedication to demystifying the law, an effort that aims to forge a more knowledgeable and empowered citizenry through accessible legal insight.
