The World Bank In Costa Rica

Costa Rica has in many ways been a development success story. An OECD member country since 2021, it enjoys a long tradition of democratic stability and commitment to institutionality, while earning a reputation for being at the forefront of green development, being the first tropical country in the world to have reversed deforestation.

Despite these favorable conditions, the development model is facing challenges. While commendable efforts have been made to combat deforestation, the country’s emissions have increased rapidly in the last two decades and could continue to grow in the absence of emission reduction reforms. Costa Rica also remains vulnerable to the effects of climate change, with 78 percent of the population considered at high risk.

Inequality is high. With a GINI coefficient of 49.2 in 2024, Costa Rica is among the most unequal OECD countries in terms of income distribution. The pandemic underscored the need to sustain a robust social compact, vital for protecting social mobility and public trust in institutions.

Despite continued investments in education, deficits in learning outcomes persist. According to the Education Observatory at Universidad Americana, in the 2022 OECD PISA test, Costa Rican students scored 415 points in reading, a decline of 11 percent from 2018 and below the OECD average of 476.

These challenges are taking place in the context of broader global considerations, including a recent increase in migration levels and changes in the international trade context. It will be crucial for Costa Rica to undertake measures to promote inclusive growth to be broad-based, and to fully reach its workforce and territory. Improving revenue mobilization and spending efficiency, especially in the infrastructure and social sectors, will be essential to tackling poverty and inequality, while strengthening climate resilience, reducing emissions, and consolidating the sustainability of its model.

Last Updated: Oct 06, 2025

Amid a dynamic global environment, the country has steadily advanced its macroeconomic fundamentals, with growth averaging 3.4 percent over the last decade, reaching 5.1 percent in 2023 and 4.3 percent in 2024, surpassing expectations. This is anchored by an outward-oriented model that has successfully targeted foreign investment and promoted trade liberalization. In the last three years, the domestic economy has also strengthened, supported by greater private consumption and investment, which helped mitigate the impacts of fluctuations in the global economy.

Moreover, although the poverty reduction process was slow between 2010 and 2022, the pace picked up significantly between 2023 and 2024, and the rate fell by 4.1 percentage points. According to the National Institute of Statistics and Censuses (INEC), poverty levels declined to 20.3 percent of the population in 2024.

Between 2008 and 2018, public spending increased faster than revenues, creating fiscal pressures. The 2018 fiscal reform and the introduction of a fiscal rule aimed to stabilize the situation, but implementation was delayed by the COVID-19 pandemic and commodity price shocks. Public debt rose from 56 percent of GDP in 2019 to 68 percent in 2021. Since then, however, fiscal consolidation efforts have gained traction, with the government narrowing the deficit and reducing debt below 60 percent of GDP by 2024, marking a historic milestone and surpassing the debt reduction target.

Last Updated: Oct 06, 2025

Costa Rica and the World Bank have built a strong partnership to support inclusive growth, human capital, and resilience to climate and disaster risks. As of end-September 2025, the active portfolio stands at US$1535.6 million across nine operations, reflecting a broad spectrum of initiatives. Of these, five investment projects account for US$755.6 million. These projects support critical areas, including: the digitalization of key government services and processes; resilient infrastructure development; education, low-carbon initiatives through the ERPA grant; and enhanced participation of Indigenous Peoples in forest conservation via the EnABLE grant. In addition, the portfolio features three development policy loan operations amounting to US$660 million—two with a deferred drawdown option (US$360 million) and one providing regular budgetary support (US$300 million). The portfolio also includes a US$120 million Program for Results (PforR) designed to promote sustainable and competitive agriculture.

Results highlight significant progress. Costa Rica’s disaster preparedness has improved through risk reduction and prevention programs. Its regulatory and institutional framework was strengthened by a legal requirement for all new public investments to follow disaster risk management best practices and include hazard assessments. This enhanced capacity is supported by the World Bank’s Catastrophe Deferred Drawdown Option, which provides immediate liquidity in case of disasters.

The Strengthening Universal Health Insurance Program improved the quality and efficiency of Costa Rica’s health system, exceeding targets such as 43% of type II diabetes patients under optimal control and equipping 90% of primary health care units with the Unique Digital Health Record. Outpatient surgeries reached 46% of total surgeries, surpassing expectations. In education, undergraduate enrollment in public universities surpassed 102,000 students, and graduate enrollment exceeded 7,000, with the number of accredited programs also above target.

On climate action, Costa Rica received payments for reducing 3.28 million tons of CO₂ emissions in 2022 and 3.34 million tons in 2024 through the Forest Carbon Partnership Facility. These payments support efforts to reduce deforestation and forest degradation and enhance forest carbon stocks through sustainable forest management and conservation programs.

Last Updated: Oct 06, 2025