New York, August  12, 2008 –

Moody’s Investors Service has revised the
outlook on Costa  Rica’s key ratings to positive from stable in
recognition of the  significant improvement in the country’s fiscal and
debt positions and the  likelihood of such improvement continuing in
the medium term despite  ongoing global turbulence.

The outlook change affects Costa Rica’s Ba1  foreign and local currency
government bond ratings. The outlook on the Baa3  foreign currency
country bond ceiling and on the Ba2 foreign currency bank  deposit
ceiling was also revised to positive from stable.

“Costa  Rica’s remarkable fiscal performance over the past few years
has been  driven by significant expenditure restraint and an
improvement in revenues,  reflecting not only the business cycle but
also a concerted effort to  enhance collection,” said Moody’s Vice
President — Senior Analyst  Alessandra Alecci. “As a result, the
fiscal and debt positions have  improved to such a degree that it would
take a major crisis to reverse the  virtuous debt dynamics seen in
recent years.” Costa Rica’s fiscal and debt  indicators have begun to
converge towards the investment-grade  level.

She said that the most surprising aspect of the government’s  fiscal
performance is the control of expenditures. Despite campaign  promises
and pent-up demand for infrastructure and social expenditures,  outlays
have actually contracted significantly in recent years, in part due  to
lower interest payments but also due to a more targeted effort  to
address social needs. The degree of autonomy of the Finance  Ministry
from political influence has been particularly impressive, she  added,
which is a testimony to the maturity of Costa Rica’s  institutions.

“The decision to change the outlook to positive comes at  a delicate
time for Costa Rica, whose key macroeconomic variables are  being
affected by the global slowdown and credit crunch,” said Alecci.  ”We
focus our ratings on the fundamentals rather than the business  cycle.”

She said that the strength of the fiscal anchor and the fact  that the
majority of Costa Rica’s public debt is in local currency and  mostly
held by public entities mitigates the risk associated with  a
potential, albeit unlikely, disorderly exit from the current  exchange
rate regime”.

“Notwithstanding recent strong pressures on  the balance of payments
and the volatility in the exchange rate market, the  external position
and the economy as a whole is equipped to deal with this  type of
shock,” said the analyst. “Foreign exchange reserves remain  at
historical highs relative to imports and to the money base, giving  the
authorities ammunition to handle the current difficult  transition
towards a free-floating exchange rate regime as well as the  widening
of the current account deficit.”

Costa Rica has been the  recipient of unprecedented high levels of
foreign direct investment in  recent years, which have more than fully
financed its current account  deficit, despite the delay in joining
Central American Free Trade Agreement  or CAFTA. Given the resilience
and diversification of its economic base,  there is, thus far, little
evidence of a sharp drop in non-debt creating  external financing that
would lead to a meaningful deterioration of Costa  Rica’s external debt
indicators.

“We will carefully monitor how  Costa Rica navigates through these
challenging times,” said Alecci. “In  particular, we will observe the
performance of the fiscal accounts and  whether financial
dollarization, one of the key rating constraints, will  significantly
increase.” A severe problem with the exchange rate regime  would have
important implications for the banking system which is close to  50%
dollarized, she underscore