Chapter

COSTA RICA

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
September 2004
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(Position as of December 31, 2003)
Status Under IMF Articles of Agreement
Article VIIIDate of acceptance: February 1, 1965.
Exchange Arrangement
CurrencyThe currency of Costa Rica is the Costa Rican colón.
Exchange rate structureUnitary.
Classification
Crawling pegThe external value of the colón is determined in the interbank market. Foreign exchange trading occurs in the organized electronic foreign exchange market (MONED) among authorized traders, where the Central Bank (CB) carries out its intervention operations. Foreign exchange trading also takes place directly between authorized institutions outside the MONED. Government and public sector institutions conduct foreign exchange transactions with the state commercial banks and the CB at the official reference exchange rate, which is calculated at the close of each business day as the weighted average of the exchange rates used in the market during the previous business day; the rate of crawl is adjusted on the basis of the differential between the rates of inflation in Costa Rica and in its main trading partners. During 2003, the annual rate of crawl was 10.5%.
Exchange taxA tax, calculated as the average daily spread between buying and selling rates multiplied by the transaction amount, is applied to all transactions in the exchange market. Proceeds from this tax must be transferred to the CB within one day. During 2003, the tax rate averaged 10%.
Exchange subsidyNo.
Forward exchange marketNo.
Arrangements for Payments and Receipts
Prescription of currency requirementsNearly all payments for exchange transactions are made in dollars. Trade payments to Central America may be made in dollars or in local currencies.
Payments arrangements
Regional arrangementsCosta Rica is a member of the CACM.
Administration of controlRegulations are issued by the CB’s Superintendency of Banks and Financial Institutions.
International security restrictionsNo.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)
Controls on domestic ownership and/or tradeNatural and juridical persons may buy or sell domestically produced gold (except national archaeological treasures).
Controls on external tradeLicenses from the CB are required for exports of gold.
Controls on exports and imports of banknotesImports and exports of foreign currency are unrestricted but are usually carried out through the CB.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyYes.
Held abroadYes.
Accounts in domestic currency held abroadn.a.
Accounts in domestic currency convertible into foreign currencyYes.
Nonresident Accounts
Foreign exchange accounts permittedYes.
Domestic currency accountsYes.
Convertible into foreign currencyYes.
Blocked accountsn.a.
Imports and Import Payments
Foreign exchange budgetn.a.
Financing requirements for importsNo.
Documentation requirements for release of foreign exchange for importsNo.
Import licenses and other nontariff measuresImports made on a barter basis require a barter license issued by the Ministry of Economy, Industry, and Commerce (MEIC).
Import taxes and/or tariffsCustoms tariffs on most goods range up to 15%. In addition, the following taxes are levied on imports: (1) a sales tax of 13%, from which certain essential items are exempt; and (2) selective consumption taxes at rates ranging from zero to 100%.
State import monopolyImports of fuel are made by the Costa Rican Petroleum Refinery and imports of grain by the National Council of Production.
Exports and Export Proceeds
Repatriation requirementsExporters must report receipts from exports within 90 days after the end of the fiscal year.
Financing requirementsn.a.
Documentation requirementsAn export form must be filed.
Export licenses
Without quotasLicenses are required for the following goods from their respective agencies: armaments, munitions, scrap iron, and scrap of nonferrous base metals from the MEIC; sugar from the Agro-Industrial Cane League; beans, ipecacuanha root, onions, cotton, meat, and thoroughbred cattle from the National Council of Production; airplanes from the Civil Aviation Board and the MEIC; Indian art objects made of gold, stone, or clay from the National Museum; tobacco from the Tobacco Defense Board; textiles, flowers, lumber, cats, dogs, certain livestock, and wild animals and plants of the forest from the Ministry of Agriculture and Livestock; bananas from the National Banana Corporation; and coffee from the Coffee Institute. In addition, when there is a lien on coffee in favor of a bank, the bank’s approval is required before the CB will grant an export license.
Export taxesTaxes are levied on coffee and bananas and, in some cases, are graduated in line with international prices. There are no taxes on nontraditional exports to countries outside Central America.
Payments for Invisible Transactions and Current Transfers
Controls on these transfers
Investment-related paymentsA 15% withholding tax is levied on all profits, dividends, and remittances of interest abroad, except for remittances to foreign banks or their financial entities recognized by the CB as institutions normally engaged in international transactions, and for interest payments on government borrowing abroad.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsReceipts of proceeds must be reported within 90 days after the end of the fiscal year.
Restrictions on use of fundsn.a.
Capital Transactions
Controls on capital transactionsn.a.
Controls on capital and money market instrumentsThe MOF has been authorized by the national assembly to issue bonds in international markets. These bonds are to be issued annually—beginning in 2000 and continuing for five years—in amounts equivalent to $250 million, except for the year 2003, when the amount will be increased to the equivalent of $450 million. If the annual amount is not issued or sold by the end of a year, the remaining amount will be added to the amount for the following year.
Controls on derivatives and other instrumentsNo.
Controls on credit operations
Commercial creditsThe National Budget Authority (composed of the Minister of Finance, the Minister of Planning, and the President of the CB) is in charge of authorizing the negotiation of new external credits contemplated by the central government, decentralized agencies, and state enterprises.
Financial credits
By residents to nonresidentsPrivate commercial banks, finance companies, and cooperatives must inform the CB when contracting credits abroad.
Controls on direct investmentNo.
Controls on liquidation of direct investmentNo.
Controls on real estate transactionsNo.
Controls on personal capital transactionsn.a.
Provisions specific to commercial banks and other credit institutionsn.a.
Provisions specific to institutional investorsn.a.
Other controls imposed by securities lawsn.a.
Changes During 2003
No significant changes occurred in the exchange and trade system.

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