Fact Sheet:  IFC and Costa Rica

In FY97 IFC approved 276 projects, providing US$3.3 billion in financing for its own account. The Corporation continued its success in mobilizing capital for private sector projects in developing countries, approving US$3.4 billion through the IFC loan syndication program. Under this program commercial lenders provide their own funds and take their own commercial risk, but IFC acts as the lender of record. Investors thus enjoy the same tax and country risk benefits that IFC derives from its special status as a multilateral development agency.

IFC Strategy in Costa Rica

Capital Markets - Given the expected consolidation process in the private banking system resulting from the dismantling of public sector banks’ monopoly on checking accounts, IFC will give priority to strengthening the system through institution building equity investments in local banks, including the introduction of foreign technical partners. In addition, Costa Rica will also benefit from IFC’s regional capital markets strategy, particularly as it relates to securities markets development

Electronics - Intel’s decision to make a major investment in Costa Rica may lead to follow-on investments by smaller, domestic firms in related activities

Infrastructure - Given that most infrastructure remains under state control, IFC’s focus is to support the power sector, which is relatively open to private participation. IFC will seek to expand its activities into other infrastructure sectors, such as telecommunications as they become open to private participation

Eco-Tourism - Eco-tourism has been one of the most dynamic areas of the economy in recent years, making it the largest foreign exchange earner after bananas

Investments

Since 1978 IFC has invested in 11 projects in Costa Rica, approving US$43 million in financing for its own account and US$15 for the accounts of participants in the Corporation’s loan syndication program. The cumulative cost of these projects is US$144 million.

total = US$58 million

IFC’s advisory services, which aim to facilitate the growth of efficient and competitive private business activity in the developing world, are reinforced by the Corporation’s cumulative experience in project work.

Through its Corporate Finance Services Department (CFS), IFC has been actively promoting privatization as a policy instrument to promote private sector development in its member countries. During the past several years, CFS has acted as lead advisor to governments on the privatization of state-owned-enterprises. Experts from IFC’sCentral Capital Markets Department (CCM) advise governments on fiscal, legal and regulatory matters related to the development of a market-oriented financial sector. And, the Foreign Investment Advisory Service (FIAS), an IFC affiliate, provides assistance to governments on attracting foreign direct investment. FIAS assisted the Costa Rican government in 1997 to develop a national strategy for promoting foreign direct investment in the electronics sector.

The donor-supported Technical Assistance Trust Funds Program (TATF) is an important element of IFC’s advisory effort. Through TATF, IFC hires consultants to conduct a broad range of technical assistance activities, from helping entrepreneurs develop project proposals to assisting with private sector institution-building. With the exception of one of TATF’s major funds, each trust fund supports consultants from donor countries, and individual technical assistance assignments are approved by the donor countries. This resource helps IFC expand the range of its technical assistance efforts—including some activities that might not otherwise be possible—both for operational and advisory work.

For more information, please contact:

Mr. Karl Voltaire
 Director, Latin America and Caribbean Department
 International Finance Corporation
 2121 Pennsylvania Avenue NW
 Washington, DC 20433
 Telephone: (202) 473-0558
 Facsimile: (202) 974-4394