Obligation Costa Rica 6.125% ( USP3699PGK77 ) en USD

Costa Rica

100.58 % ▲

Costa Rica

USP3699PGK77 ( en USD )

6.125% par an ( paiement semestriel )

18/02/2031

Prospectus brochure de l'obligation Costa Rica USP3699PGK77 en USD 6.125%, échéance 18/02/2031

1 000 USD

1 200 000 000 USD

P3699PGK7

N/A

19/08/2024 ( Dans 121 jours )

L'Obligation émise par Costa Rica ( Costa Rica ) , en USD, avec le code ISIN USP3699PGK77, paye un coupon de 6.125% par an.
Le paiement des coupons est semestriel et la maturité de l'Obligation est le 18/02/2031

OFFERING CIRCULAR

The Republic of Costa Rica
LEI: 549300S1EK2VN6XVJP58

U.S.$1,200,000,000 6.125% Notes due 2031
U.S.$300,000,000 7.158% Notes due 2045
The Republic of Costa Rica (the "Republic" or "Costa Rica") is offering U.S.$1,200,000,000 aggregate principal amount of 6.125%
Notes due 2031 (the "2031 Notes") and U.S.$300,000,000 aggregate principal amount of 7.158% Notes due 2045 (the "2045 Notes" and, collectively
with the 2031 Notes, the "Notes").
The 2045 Notes will be consolidated, form a single series, and be fully fungible, with the Republic's outstanding U.S.$1,000,000,000
7.158% Global Notes due 2045 issued on March 12, 2015 (the "Original 2045 Notes"). After giving effect to this offering, the total amount
outstanding of the Republic's 7.158% Notes due 2045 will be U.S.$1,300,000,000.
Interest on the 2031 Notes will be payable semi-annually in arrears on February 19 and August 19 of each year, commencing on February
19, 2020. The 2031 Notes will mature on February 19, 2031 (the "2031 Maturity Date"). Principal on the 2031 Notes will be paid in three
installments on February 19, 2029, February 19, 2030 and on the 2031 Notes Maturity Date. Interest on the 2045 Notes will be payable semi-
annually in arrears on March 12 and September 12 of each year, commencing on March 12, 2020. The 2045 Notes will mature and principal thereon
will be repaid in a single installment at par on March 12, 2045. The Republic may, at its option, redeem the Notes, in whole or in part, before
maturity, on no less than 30 nor more than 60 days' notice on the terms described under "Terms and Conditions of the Notes Optional Redemption."
The Notes will constitute general, direct, unsecured and unconditional Public External Indebtedness of the Republic. The Notes rank
and will rank without any preference among themselves and equally with all other unsecured and unsubordinated Public External Indebtedness (as
defined under "Terms and Conditions of the Notes--Definitions") of the Republic. It is understood that this provision shall not be construed so as
to require the Republic to make payments under the Notes ratably with payments being made under any other Public External Indebtedness. The
Republic has pledged its full faith and credit for the due and punctual payment of all amounts due in respect of the Notes.
The Notes will contain "collective action clauses". Under these provisions, which differ from the terms of the Republic's Public External
Indebtedness issued prior to March 12, 2015, the Republic may amend the payment provisions of the Notes and other reserved matters listed in the
indenture dated March 12, 2015 (the "Indenture") with the consent of the holders of: (1) with respect to a single series of notes, more than 75% of
the aggregate principal amount of the outstanding notes of such series; (2) with respect to two or more series of notes issued under the Indenture,
if certain "uniformly applicable" requirements are met, more than 75% of the aggregate principal amount of the outstanding notes of all series
affected by the proposed modification, taken in the aggregate; or (3) with respect to two or more series of notes issued under the Indenture, more
than 662/3% of the aggregate principal amount of the outstanding notes of all series affected by the proposed modification, taken in the aggregate,
and more than 50% of the aggregate principal amount of the notes of each series affected by the proposed modification, taken individually.
Except as described herein, payments on the Notes will be made without deduction for or on account of withholding taxes imposed by
the Republic to the extent set forth under "Terms and Conditions of the Notes--Additional Amounts." Application will be made to list the 2031
Notes on the Official List of the Luxembourg Stock Exchange and to have the 2031 Notes admitted to trading on the Euro MTF Market. The
Original 2045 Notes are listed on the Official List of the Luxembourg Stock Exchange and are admitted to trading on the Euro MTF Market. This
Offering Circular constitutes a prospectus for the purpose of the Luxembourg Law dated July 16, 2019 on prospectuses for securities, as amended.
See "Risk Factors" beginning on page 18 regarding certain risk factors you should consider before investing in the Notes.
Issue Price for the 2031 Notes: 99.077% plus accrued interest, if any, from November 19, 2019
Issue Price for the 2045 Notes: 98.925% plus accrued interest from September 12, 2019
The Notes have not been and will not be registered under the United States Securities Act of 1933, as amended (the "Securities Act").
The Notes may not be offered or sold within the United States or to U.S. persons except to qualified institutional buyers in reliance on the exemption
from registration provided by Rule 144A under the Securities Act and to certain persons in offshore transactions in reliance on Regulation S under
the Securities Act. You are hereby notified that sellers of the Notes may be relying on the exemption from the provisions of Section 5 of the
Securities Act provided by Rule 144A under the Securities Act.
Delivery of the Notes will be made on or about November 19, 2019 only in book-entry form through the facilities of The Depository
Trust Company ("DTC") and its direct and indirect participants, including Euroclear Bank S.A./N.V., as operator of the Euroclear System
("Euroclear") and Clearstream Banking, société anonyme ("Clearstream"), against payment in New York, New York.
Joint Book-Running Managers
Citigroup
HSBC
The date of this Offering Circular is November 12, 2019.

Costa Rica

IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE REPUBLIC AND THE TERMS AND CONDITIONS OF THE OFFERING,
INCLUDING THE MERITS AND THE RISKS INVOLVED.
The Republic is responsible only for the information contained in this document or to which it has
referred you. The Republic has not, and the Initial Purchasers have not, authorized anyone to provide you
with information that is different from the information contained in this document. The Republic is offering
to sell the Notes only in jurisdictions where offers and sales are permitted. The offer and sale of the Notes in
certain jurisdictions is subject to restrictions described herein under "Plan of Distribution." The information
contained in this document, or to which the Republic has referred you, is accurate only as of the date of such
documents, regardless of the time of delivery of such documents or any sales of Notes.
This Offering Circular may only be used for the purposes for which it has been published.
________________
TABLE OF CONTENTS
Page
NOTICE TO INVESTORS ............................................................................................................................................ i
DEFINED TERMS AND CONVENTIONS ................................................................................................................ iv
FORWARD-LOOKING STATEMENTS ..................................................................................................................... v
ENFORCEMENT OF CIVIL LIABILITIES ................................................................................................................ v
SUMMARY .................................................................................................................................................................. 1
SELECTED ECONOMIC INDICATORS .................................................................................................................. 13
THE OFFERING ......................................................................................................................................................... 14
RISK FACTORS ......................................................................................................................................................... 18
USE OF PROCEEDS .................................................................................................................................................. 27
REPUBLIC OF COSTA RICA ................................................................................................................................... 28
THE COSTA RICAN ECONOMY ............................................................................................................................. 41
BALANCE OF PAYMENTS AND FOREIGN TRADE ............................................................................................ 68
MONETARY SYSTEM .............................................................................................................................................. 77
PUBLIC SECTOR FINANCES ................................................................................................................................ 103
PUBLIC SECTOR DEBT ......................................................................................................................................... 116
TERMS AND CONDITIONS OF THE NOTES ...................................................................................................... 128
PLAN OF DISTRIBUTION ...................................................................................................................................... 142
BOOK-ENTRY SETTLEMENT AND CLEARANCE ............................................................................................ 149
TRANSFER RESTRICTIONS .................................................................................................................................. 152
TAXATION .............................................................................................................................................................. 155
VALIDITY OF THE NOTES ................................................................................................................................... 159
GENERAL INFORMATION .................................................................................................................................... 160

_____________________
NOTICE TO INVESTORS
The Notes will be issued in registered form only. Notes sold in offshore transactions in reliance on Regulation
S under the Securities Act ("Regulation S") will be represented by one or more permanent global notes in fully
registered form without interest coupons (the "Regulation S Global Note") deposited with a custodian for, and

- i -

registered in the name of a nominee of, DTC for the respective accounts at DTC as such subscribers may direct. Notes
sold in the United States to qualified institutional buyers (each a "qualified institutional buyer") as defined in, and in
reliance on, Rule 144A under the Securities Act ("Rule 144A") will be represented by one or more permanent global
notes in fully registered form without interest coupons (the "Restricted Global Note" and, together with the Regulation
S Global Note, the "Global Notes") deposited with a custodian for, and registered in the name of a nominee of, DTC
for the respective accounts at DTC as such subscribers may direct. Beneficial interests of DTC participants (as defined
under "Book-Entry Settlement and Clearance") in the Global Notes will be shown on, and transfers thereof between
DTC participants will be effected only through, records maintained by DTC and its direct and indirect participants,
including Euroclear and Clearstream, if applicable. See "Book-Entry Settlement and Clearance." Except as described
herein, definitive Notes will not be issued in exchange for beneficial interests in the Global Notes. See "Terms and
Conditions of the NotesForm, Denomination and Title." For restrictions on transfer applicable to the Notes, see
"Transfer Restrictions" and "Plan of Distribution."
The Republic has taken reasonable care to ensure that the information contained in this Offering Circular is
true and correct in all material respects and not misleading as of the date hereof, and that, to the best of the knowledge
and belief of the Republic, there has been no omission of information which, in the context of the issue of the Notes,
would make this document as a whole or any such information misleading in any material respect. The Republic
accepts responsibility accordingly.
This Offering Circular does not constitute an offer by, or an invitation by or on behalf of, the Republic,
Citigroup Global Markets Inc. or HSBC Securities (USA) Inc. (Citigroup Global Markets Inc., together with HSBC
Securities (USA) Inc., the "Initial Purchasers") to subscribe to or purchase any of the Notes. Each recipient of this
Offering Circular shall be deemed to have made its own investigation and appraisal of the financial condition of the
Republic. The distribution of this Offering Circular or any part of it and the offering, possession, sale and delivery of
the Notes in certain jurisdictions may be restricted by law. People in possession of this Offering Circular are required
by the Republic and the Initial Purchasers to inform themselves about and to observe any such restrictions. See "Plan
of Distribution" and "Transfer Restrictions" for a description of further restrictions on the offer, sale and delivery of
Notes and on distribution of this Offering Circular and other offering material relating to the Notes.
Each person purchasing Notes pursuant to Rule 144A will be deemed to have:

represented that it is purchasing the Notes for its own account or an account with respect to which
it exercises sole investment discretion and that it or such account is a qualified institutional buyer
(as defined in Rule 144A); and

acknowledged that the Notes have not been and will not be registered under the Securities Act or
any state securities laws and may not be reoffered, resold, pledged or otherwise transferred except
as described under "Transfer Restrictions."
Each purchaser of Notes sold outside the United States in reliance on Regulation S will be deemed to have
represented that it is not purchasing Notes with a view to distribution thereof in the United States. Each person
purchasing Notes pursuant to Rule 144A also acknowledges that:

it has been afforded an opportunity to request from the Republic and to review, and it has received,
all additional information considered by it to be necessary to verify the accuracy of the information
herein;

it has not relied on the Initial Purchasers or any person affiliated with the Initial Purchasers in
connection with its investigation of the accuracy of the information contained in this Offering
Circular or its investment decision; and

no person has been authorized to give any information or to make any representation concerning the
Republic or the Notes other than those contained in this Offering Circular and, if given or made,
such information or representation should not be relied upon as having been authorized by the
Republic or the Initial Purchasers.

- ii -

IN CONNECTION WITH THIS ISSUE OF NOTES, EACH INITIAL PURCHASER MAY, ITSELF
OR THROUGH ITS AFFILIATES, OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE
OR MAINTAIN THE MARKET PRICE OF THE NOTES AT A LEVEL WHICH MIGHT NOT
OTHERWISE PREVAIL IN THE OPEN MARKET, TO THE EXTENT PERMITTED BY APPLICABLE
LAWS. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

- iii -

DEFINED TERMS AND CONVENTIONS
All references in this Offering Circular to "Costa Rica" or the "Republic" are to the Republic of Costa Rica
and all references to the "Government" are to the Central Government of Costa Rica.
References to "Central America" and "Central American countries" are to Honduras, Costa Rica, Guatemala,
El Salvador, Panama and Nicaragua.
References to "billions" are to thousands of millions. Certain amounts included in this Offering Circular
have been subject to rounding adjustments; accordingly, figures shown as totals in certain tables may not be an
arithmetic aggregation of the figures which precede or follow them.

"Consolidated public sector deficit" means the aggregate of the Government fiscal deficit, the deficit
of the Central Bank of Costa Rica (Banco Central de Costa Rica) (the "Central Bank"), and the
financial results of other non-financial public sector institutions.

"Government fiscal deficit" means the positive difference between the total expenses incurred by
the Government and the total revenues received by the Government.

"Value added" with respect to exports means the difference between the value of final goods
exported and the value of the raw materials and intermediate goods used to produce the final goods
exported.

"Non-traditional products" are products other than coffee, bananas, sugar and beef, and include non-
traditional agricultural products such as vegetables, fruits, roots, medicinal and decorative plants as
well as manufacturing, including light manufacturing and textiles.

Measures of distance in this Offering Circular are stated in miles (mi), each of which is equal to
approximately 1.609 kilometers (km). Measures of area in this Offering Circular are stated in square
miles (mi²), each of which is equal to approximately 2.59 square kilometers (km²), or in hectares
(ha), each of which is equal to approximately 2.47 acres (ac).
Presentation of Financial and Economic Information
The fiscal year of the Government commences on January 1 and ends on December 31 of each year.
The Republic's official financial and economic statistics are subject to a three-year review process by the
Central Bank and the Ministry of Finance (Ministerio de Hacienda) (the "Ministry of Finance"), during which time
such information may be adjusted or revised. As a result, the information and data contained in this Offering Circular
for 2015, 2016, 2017 and 2018, and any figures for 2019, must be considered preliminary and subject to further
revision. The Government believes that this process is substantially similar to that undertaken by industrialized
nations. The Government does not expect revisions to be material, although there is no assurance that material changes
will not be made.
Certain statistical information reported herein has been derived from official publications of, and information
supplied by, among others, the Central Bank, the Ministry of Finance, the National Institute of Statistics (Instituto
Nacional de Estadística y Censos) (the "National Institute of Statistics"), the General Superintendency of Financial
Institutions (Superintendencia General de Entidades Financieras) ("SUGEF") and the Superintendency of Securities
(Superintendencia General de Valores) ("SUGEVAL").
Amounts in certain tables in this Offering Circular may differ from the sum of the respective individual items
in such tables due to rounding.

Currency of Presentation and Exchange Rate
Unless otherwise specified or the context requires, references to "U.S. dollars" and "U.S.$" are to the lawful
currency of the United States. References to "colones" and "" in this Offering Circular are to the lawful currency of

- iv -

Costa Rica. References to "euros" and "" are to the lawful currency of the European countries members of the
eurozone. References to "yen" or "¥" are to the lawful currency of Japan. Translations of colones, euros and yen to
dollars have been made only for the convenience of the reader at various exchange rates and should not be construed
as a representation that the amounts in question have been, could have been or could be converted into U.S. dollars at
any particular rate or at all. Historical amounts translated into U.S. dollars or colones have been converted at historical
average rates of exchange for the periods indicated, unless otherwise stated. References in this Offering Circular to
"real GDP" are to the chained volume of production calculated at prices prevalent in the previous calendar year, taking
2012 as the reference year. The reference interbank rate for the sale of U.S. dollars for colones at the close of business
on November 4, 2019 was 587.50 per U.S.$1.00, as reported by the Central Bank.
FORWARD-LOOKING STATEMENTS
This Offering Circular contains certain forward-looking statements (as such term is defined in the Securities
Act) concerning the Republic. These statements are based upon beliefs of certain government officials and others as
well as a number of assumptions and estimates, which are inherently subject to significant uncertainties, many of
which are beyond the control of the Republic. Future events may differ materially from those expressed or implied
by such forward-looking statements. Such forward-looking statements are principally contained in the sections
"Summary," "Republic of Costa Rica," "The Costa Rican Economy," "Balance of Payments and Foreign Trade,"
"Monetary System," "Public Sector Finances" and "Public Sector Debt," and include, but are not limited to, statements
related to the expected fiscal impact of the implementation of the Public Finance Strengthening Law No. 9,635 (Ley
de Fortalecimiento de las Finanzas Públicas) (the "Public Finance Strengthening Law") enacted by the Legislative
Assembly on December 3, 2018. In addition, in those and other portions of this Offering Circular, the words
"anticipates," "believes," "contemplates," "estimates," "expects," "plans," "intends," "projections" and similar
expressions, as they relate to the Republic, are intended to identify forward-looking statements. Such statements
reflect the current views of the Republic with respect to future events and are subject to certain risks, uncertainties and
assumptions. The Republic undertakes no obligation publicly to update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise. In light of these risks and uncertainties, there can
be no assurances that the events described or implied in the forward-looking statements contained in this Offering
Circular will in fact occur.
ENFORCEMENT OF CIVIL LIABILITIES
The Republic is a sovereign state. Consequently, it may be difficult for investors to obtain or realize in the
United States or elsewhere upon judgments against the Republic. To the fullest extent permitted by applicable law,
the Republic will irrevocably submit to the non-exclusive jurisdiction of any New York State or United States federal
court sitting in the City of New York, and any appellate court thereof, in any suit, action or proceeding arising out of
or relating to the Notes or the Republic's failure or alleged failure to perform any obligations under the Notes (a
"Related Proceeding," which term shall exclude claims or causes of action arising under the federal securities laws of
the United States or any state securities laws), and the Republic will irrevocably agree that all claims in respect of any
such Related Proceeding may be heard and determined in such New York State or United States federal court. The
Republic will irrevocably waive, to the fullest extent it may effectively do so, the defense of an inconvenient forum
to the maintenance of any Related Proceeding and any objection to any Related Proceeding whether on the grounds
of venue, residence or domicile. To the extent that the Republic has or hereafter may acquire any sovereign or other
immunity from jurisdiction of such courts with respect to a Related Proceeding (whether through service of notice,
attachment prior to judgment, attachment in aid of execution, execution or otherwise), the Republic has, to the fullest
extent permitted under applicable law, including the United States Foreign Sovereign Immunities Act of 1976, as
amended (the "Immunities Act") irrevocably waived such immunity in respect of any such Related Proceedings;
provided, however, that under the Immunities Act, it may not be possible to enforce in the Republic a judgment based
on such a United States judgment, and that under the laws of the Republic, the property and revenues of the Republic
are exempt from attachment or other form of execution before or after judgment. See "Terms and Conditions of the
NotesGoverning Law and Jurisdiction."
Notwithstanding the preceding paragraph, the Republic has not consented to service or waived sovereign
immunity with respect to actions brought against it under the United States federal securities laws or any state
securities laws. In the absence of a waiver of immunity by the Republic with respect to such actions, it would not be
possible to obtain a judgment in such an action brought in a United States court against the Republic unless such court
were to determine that the Republic is not entitled under the Immunities Act to sovereign immunity with respect to

- v -

such action. Further, even if a United States judgment could be obtained in any such action under the Immunities Act,
it may not be possible to enforce in the Republic a judgment based on such a United States judgment. Execution upon
property of the Republic located in the United States to enforce a United States judgment may not be possible except
under the limited circumstances specified in the Immunities Act.

- vi -

SUMMARY
The following summary does not purport to be complete and is qualified in its entirety by, and is subject to,
the detailed information appearing elsewhere in this Offering Circular.
General
Costa Rica is located in Central America, bordered by Nicaragua to the north, Panama to the southeast, the
Pacific Ocean to the west, and the Caribbean Sea to the east. As of June 30, 2019, Costa Rica had an estimated
population of approximately 5.05 million.
Having maintained uninterrupted, democratically-elected governments since 1949, Costa Rica is recognized
for having a highly stable constitutional democracy and one of the highest standards of living in Latin America. Costa
Rica's gross domestic product ("GDP") for the first semester of 2019 was approximately U.S.$30.5 billion. In 2018,
Costa Rica's GDP was U.S.$60.2 billion and its per capita GDP was U.S.$12,017.8, the second highest in Central
America according to the World Bank. In 2017, 2016 and 2015 Costa Rica's GDP was U.S.$58.2 billion, U.S.$57.2
billion and U.S.$54.8 billion, respectively, and its per capita GDP was U.S.$11,758.4, U.S.$11,687.8 and
U.S.$11,335.5, respectively. The Central Bank's 2019-2020 macroeconomic program, published on July 17, 2019,
which is subject to periodical revisions (the "Central Bank 2019 Projections"), estimates that GDP will be U.S.$61.6
billion for 2019. See "Risk Factors--Risk Factors Related to Costa Rica-- There can be no assurance that the events
described or implied in the forward-looking statements, estimates and projections included in this Offering Circular
will in fact occur."

According to the United Nations ("UN") Development Program's 2018 Human Development Report, the
Republic is ranked fourth in Latin America on the Human Development Index, a composite index focusing on three
dimensions of human development: (i) long and healthy life measured by life expectancy at birth; (ii) ability to acquire
education measured by average years of schooling; and (iii) ability to achieve a decent standard of living measured by
gross national income per capita.
In 2018, Costa Rica ranked the highest in Central America and among the highest in Latin America and the
Caribbean in the World Bank's worldwide governance indicators for: (i) government effectiveness, which captures
public perception of the quality of public services, the quality of the civil service and the degree of its independence
from political pressures, the quality of policy formulation and implementation and the credibility of the government's
commitment to those policies; (ii) political stability and absence of violence and terrorism, which measures
perceptions of the likelihood of political instability and/or politically motivated violence, including terrorism; and (iii)
voice and accountability, which captures perceptions of the extent to which a country's citizens are able to participate
in selecting their government, as well as freedom of expression, freedom of association and freedom of the press. In
addition, in 2018, Costa Rica had the second highest per capita income of Central America and the highest life
expectancy of Latin America as a result of the Republic's investment in healthcare, safety and education.
According to the World Bank, Costa Rica is a world leader with respect to environmental policies. In the late
1980s, Costa Rica became the first tropical country to reverse the deforestation process by implementing environment
protection policies, including the establishment of forest reserves and national parks, incentives to promote ecotourism
and the implementation of the Environmental Services Payment Plan (Programa de Pago de Servicios Ambientales)
("Payment of Environmental Services Program"), a plan that compensates landowners for avoiding deforestation and
providing environmental services in their forest lands. In 2018, 98.6% of the energy generated in Costa Rica was
produced by renewable sources. As of December 31, 2018, 25.46% of the Costa Rican territory was designated
environmentally-protected land. In September 2019, Costa Rica was awarded the UN "Champions of the Earth" award
in recognition of its environmental protection policies and its commitment to the implementation of programs to
reduce greenhouse gas emissions and combat climate change.
According to the World Bank, Costa Rica has one of the lowest poverty rates of Latin America. See
"Republic of Costa Rica--Social Indicators."
Costa Rica's Historical and Current Highlights

1

Political, economic and social stability. Costa Rica has had uninterrupted democratically elected
governments since 1949 and is one of the oldest and most stable democratic regimes in Central
America. The Government has continued to implement policies designed to maintain political
stability, promote economic growth and advance social development. As a result of these policies,
Costa Rica has maintained sustained economic growth since 2009, although that trend has weakened
in the last two years with growth rates of 3.4% in 2017 and 2.6% in 2018. The country's economy
has grown at an average rate of 3.3% over the last decade. Further, the Republic's 21.0% poverty
rate is one of the lowest in Latin America. Healthcare services are provided to all citizens and the
2019 budget approved by the Costa Rican Legislative Assembly (Asamblea Legislativa de la
República de Costa Rica) (the "Legislative Assembly") allocates approximately 42.5% of public
expenditures to fund social sectors such as education, social protection, the environment, health,
housing, transport, recreation and cultural services.
Proven monetary policy. Since the mid-1980's, Costa Rica has continued to liberalize its economy.
Beginning in 2006, the Central Bank transitioned from a crawling peg exchange regime, prevalent
between 1992 to 2006, to a crawling band. This transition was part of Costa Rica's move toward an
inflation-targeting regime. The crawling band regime lasted from 2006 to 2015. In 2015, the Central
Bank transitioned from the crawling band regime to a managed floating regime. Under this new
policy, the Central Bank allows the value of the exchange rate to be determined by the supply and
demand in the local market, though the Central Bank can intervene in the exchange rate market for
stabilization purposes, particularly to avoid sharp fluctuations in the exchange rate According to
Foreign Currency Market (Mercado de Monedas Extranjeras) ("MONEX"), since the elimination
of the exchange rate band in 2015 until August 2019, the colón to U.S. dollar exchange rate has
fluctuated between 531.81 per U.S.$1.00 and 628.85 per U.S.$1.00. In contrast, when the
crawling band was in place between 2006 and 2015, the colón to U.S. dollar exchange rate fluctuated
between 497.71 per U.S.$1.00 and 503.17 per U.S.$1.00.
In 2016, the Central Bank decreased the inflation target range from the 3% to 5% range then
applicable to the current 2% to 4% range. The 2.03% annual inflation rate in 2018 was within the
target range.
During 2019, the monetary policy interest rate has been lowered five times. On October 30, 2019,
the Central Bank reduced the monetary policy rate (tasa de política monetaria) ("MPR") by 50 basis
points to 3.25%. This adjustment was carried out prospectively based on the Central Bank's analysis
of the expected evolution of inflation and macroeconomic factors, including the analysis of the
international and domestic context.
Commitment to foreign trade and foreign investment. After the debt crisis in the early 1980's, Costa
Rica transitioned from an import-substitution growth model to an export-led development model
based on international economic integration, export diversification and foreign direct investment.
Costa Rica has established a special export regime to boost the country's exports and to attract
foreign companies. The special export regime applies to companies operated by foreign or domestic
investors (i) within a Free Trade Zone ("FTZ") or (ii) under the Active Finishing Regime ("AFR").
This and other government policies have enabled Costa Rica to diversify its trade portfolio by
destination and by product. Today, Costa Rica hosts a number of large international companies that
have established business operations in the country, including Procter & Gamble, UPS, Thermo
Fisher Scientific, DHL, Roche, Brightstar Corp., MCM, NTT Data IBM, some of which have
recently announced new job opportunities in the service sector. Costa Rica's literacy rate (the highest
in Central America), strong educational system, strategic geographic location and social, economic
and political stability contribute to its global competitiveness.
Additionally, Costa Rica has entered into 15 free trade agreements with more than 15 countries,
including the United States, Canada, Mexico, Chile, Panama, Peru, Singapore, members of the
Caribbean Community and China. Free trade agreements with South Korea and the Pacific Alliance
are currently under negotiation. In addition, Costa Rica is a party to the United States-Dominican
Republic-Central America Free Trade Agreement ("DR-CAFTA") and is a member of the World

2