The IMF’s 2026 Article IV report on Costa Rica

The International Monetary Fund’s annual review raises relevant observations on monetary policy, competitiveness, public safety, pensions, the financial system, and fiscal sustainability. For tourism, several of these signals deserve immediate attention.

Brief Summary

The IMF’s 2026 Article IV report on Costa Rica is neither an adjustment program nor a loan, but rather an independent technical assessment of the national economy. While it acknowledges macroeconomic strengths, it also issues important warnings, particularly regarding the Central Bank’s monetary policy, exchange rate appreciation, crime as an economic risk, and the need for reforms to sustain competitiveness. From a tourism perspective, these observations are especially relevant because of their impact on costs, demand, investment, and confidence in the destination.

Introduction

In 2026, Costa Rica underwent the International Monetary Fund’s Article IV review, a technical exercise that functions as an external diagnostic of the country’s economic performance and its main public policies.

The document recognizes important strengths. Among them are solid economic growth, a relatively low current account deficit, and progress in financial supervision. However, the overall tone of the report also sends a clear signal: the IMF sees imbalances and risks that require timely corrections.

For the Center for Tourism Studies, this analysis is particularly relevant because several of the issues highlighted by the Fund directly affect tourism activity. The exchange rate, domestic demand, public safety, infrastructure, competitiveness, and investor confidence are not isolated matters. They are factors that concretely shape the environment in which tourism businesses operate and the country’s positioning as a destination.

What is the IMF’s Article IV Consultation?

The Article IV Consultation is the periodic review that the International Monetary Fund conducts for each member country. It is not an adjustment program, nor financing, nor an automatic imposition of measures. Rather, it is an independent technical assessment of the state of the economy and the quality of public policies.

In Costa Rica’s case, the 2026 report contains 34 recommendations grouped into seven policy areas. That alone gives an idea of its weight. Even more so when, just a few months ago, the country itself was being presented as a relatively successful case on the macroeconomic front.

A positive macroeconomic outlook, but with warnings

The report begins from an ambivalent reality. On the one hand, Costa Rica maintained real growth of 4.6% in 2025, driven mainly by free trade zone exports, and growth of 3.8% is still projected for 2026. In addition, the current account deficit remains low.

But beneath that picture lie important tensions. The IMF warns that Costa Rica, due to its high degree of international integration, is also vulnerable to external shocks: trade tensions, geopolitical conflicts, commodity price volatility, and higher financing costs. Added to these are domestic risks, including one the report underscores clearly: rising crime.

The main warning sign: the Central Bank

One of the report’s strongest messages is directed at the Central Bank of Costa Rica.

The IMF notes that the country has accumulated 34 consecutive months of inflation below the target range, and that by February 2026 inflation had entered negative territory. Added to this are extremely low core inflation and depressed inflation expectations.

The diagnosis is delicate: the real monetary policy rate appears to be above its neutral level, which means that monetary policy remains too restrictive for current conditions.

In other words, the Fund suggests that Costa Rica needs a reduction in the monetary policy rate in order to better reactivate domestic demand and avoid deflationary dynamics. In addition, it recommends improving the quality of the inflation-targeting framework, as well as strengthening the Central Bank’s governance, transparency, communication, and institutional autonomy.

The exchange rate dimension and its importance for tourism

Although the report is not limited to the exchange rate issue, several of its observations have a direct reading on this point.

The first is clear: a reduction in the monetary policy rate can alter financial incentives and contribute to a more balanced correction in the foreign exchange market. The second relates to improvements in the inflation-targeting framework, whose credibility and design also influence expectations and market signals. The third appears in the pensions chapter: allowing greater foreign investment by pension funds generates structural demand for foreign currency and can help deepen the foreign exchange market.

Taken together, these recommendations point toward an orderly correction of distortions that have weighed on the country’s competitiveness.

For tourism activity, this is no minor technical detail. A persistently unfavorable exchange rate reduces margins, pressures costs, makes the destination more expensive relative to regional competitors, and particularly affects companies whose revenues are tied to international visitors.

Public safety: no longer only a social issue

One of the report’s most important aspects, and probably one of the closest to tourism’s everyday reality, is that the IMF classifies crime as an economic risk.

This changes the tone of the debate. Security is no longer seen only as a police or social matter; it also becomes a variable of competitiveness, investment, and confidence.

The report warns that rising homicides and other associated phenomena may directly affect tourism, foreign direct investment, and private consumption. The implication is clear: reducing violence is not only an institutional or community aspiration; it is an economic objective that conditions the country’s performance.

For a tourism destination, the perception of safety is an essential part of its value. Once it erodes, the damage may be silent at first, but very costly later.

Financial system, pensions, and stability

The report considers systemic risks in the financial system to be contained and acknowledges progress in risk-based supervision. Nevertheless, it points to urgent tasks: approving a bank resolution framework, advancing deposit insurance, strengthening macroprudential tools, and establishing clear rules for fintech and digital assets.

In pension matters, the signal is twofold. On the one hand, the IMF proposes greater flexibility for pension fund investment abroad, which also connects to the exchange rate issue. On the other hand, it warns about the risks of possible early withdrawals because of their adverse effects on the economy.

These may seem like issues far removed from the daily reality of tourism, but they are not. Financial stability, market depth, and regulatory certainty are part of the overall environment in which investment and growth decisions are made.

Fiscal policy, CCSS, and institutional sustainability

The Fund also warns that central government debt exceeded 60% of GDP in 2025 and that fiscal space will be constrained by 2027. It therefore proposes a tax reform and expenditure-reordering agenda, along with the possibility of facilitating external debt issuance within authorized limits.

At the same time, it underscores the need to address the structural situation of the CCSS, both in the Old Age, Disability, and Death regime and in the Health and Maternity Insurance system. The recommendations point to parametric reforms, stronger primary care, prevention, lower operating costs, settlement of the State’s debt to the institution, and the application of international public sector accounting standards.

This matters because Costa Rica’s institutional strength remains one of its most valuable assets. When that foundation weakens, competitiveness also suffers.

Competitiveness: the pending agenda

The report also insists on a competitiveness agenda that touches on structural matters: greater female labor force participation, reduced caregiving burdens, stronger dual technical education, closing infrastructure gaps through public-private partnerships, better linkages between domestic and multinational firms, and the use of artificial intelligence in both the public and private sectors.

Here there is an important convergence with many of the discussions tourism has been raising for some time. Competitiveness does not depend on a single ministry or a single policy. It requires coordination, investment, human talent, infrastructure, security, and strategic vision.

Conclusion

The IMF’s 2026 Article IV report leaves a clear impression: Costa Rica retains important strengths, but it cannot afford to interpret that stability as a guarantee of the future.

The report warns of excessively restrictive monetary policy, of the need to correct distortions affecting competitiveness, of the economic risks associated with crime, and of pending reforms in areas that are sensitive for institutional sustainability.

For tourism, the message deserves special attention. The performance of this activity does not depend only on promotion or entrepreneurial dynamism. It also depends on the macroeconomic environment, exchange rate signals, public safety, infrastructure, institutional quality, and the country’s ability to sustain competitive conditions.

Read from that perspective, this report is not only an economic document. It is also a strategic warning.

CET

At the Center for Tourism Studies, we believe that this type of assessment must be analyzed with seriousness, rigor, and strategic perspective, especially when its findings connect so directly with the country’s competitiveness and with the performance of tourism activity.

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