The Costa Rican economy has grown at rapid rates in the last three years, underpinned by a robust world expansion, sound economic policies, and strong business and consumer confidence. Economic policies have been well oriented. The fiscal position has substantially improved. The exchange rate level and policies are consistent with the maintenance of external stability. IMF staff supports the neutral policy stance envisaged in the 2008 central government budget and plans for a substantive tax reform. The authorities should push ahead with financial system reforms.