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IDB Approves $300 Million Loan to Underpin Costa Rica’s Decarbonization Plan

Costa Rica continues to forge ahead in its transition to a green economy with net-zero emissions by 2050. The Inter-American Development Bank (IDB) approved a $300 million loan to continue to back Costa Rica’s National Decarbonization Plan, which aims for net-zero emissions by 2050. The IDB loan is the second in a series of two programmatic policy-based lending operations.

The latest loan will enable Costa Rica to deepen the reforms of the first $230 million operation approved in 2020. The goal of these reforms is to bolster climate action management and monitoring, preserve ecosystems that effectively sequester greenhouse gases, incentivize the use of electrical energy and active mobility, and boost inclusion and gender equality in the shift to a green economy.

Climate action monitoring is considered a necessary step on Costa Rica’s path to achieving a net-zero economy. Another key component of the decarbonization plan is agriculture, which accounts for 42.3% of the country’s exports and 12.8% of its jobs. According to experts, this industry can help capture more emissions by replacing current farming practices with climate-smart agriculture.

For electricity use and active mobility, Costa Rica used the first loan to establish non-tax incentives for buying electric vehicles. It also passed regulations to build a network of electric vehicle charging stations. With the second lending operation, the country plans to set rates that make it possible to electrify transportation and use electrical energy for industrial, commercial, and residential purposes.

All of these steps will have a positive impact on Costa Rican society by slashing greenhouse gas emissions to mitigate climate change and reduce air pollution from internal combustion engine vehicles. The combined benefits of decarbonization for the country from 2020 to 2050 are valued at an estimated $41 billion.

The most recent loan is composed of $250 million in ordinary capital from the IDB, plus $50 million from the Government of Korea. The funds will be administrated by the Bank via the Korean Infrastructure Development Co-financing Facility. The French Development Agency is also providing €100 million in parallel funding. Altogether, the country will receive over $400 million for its decarbonization goals.

The $300 million IDB loan has a 20-year repayment term and a 5.5-year grace period.

About the IDB

The Inter-American Development Bank is devoted to improving lives. Established in 1959, the IDB is a leading source of long-term financing for economic, social, and institutional development in Latin America and the Caribbean. The IDB also conducts cutting-edge research and provides policy advice, technical assistance, and training to public and private sector clients throughout the region.



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