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Evaluating Country Programmes
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Several factors induced USAID to raise funding levels in Costa Rica. First, the
new Reagan administration was committed to considerably increased aid for Latin
America, which it charged Democrats with ignoring. In this context, Congress
regarded Costa Rica with substantial interest as the region’s leading democratic
experiment. Second, and even more important, US opposition to the Sandinista
government in Nicaragua led to efforts to support the rest of Central America
against Sandinista expansion in the region. President Reagan and much of his Cabinet
visited Costa Rica in December 1982 to pledge US support. In 1983, the President
established a commission under Henry Kissinger to study Central America’s
problems, which resulted in a 1984 report calling for a massive increase in US assistance
to the region. A third factor in the high level of aid, which brought Treasury
Department support, was heavy Costa Rican debt to US commercial banks. Costa
Rica’s visibility as a debtor made the country important in maintaining the US strategy
of promoting resumption of debt service wherever possible.
After 1982, the programme’s purpose became macro-economic support. Nine
annual Economic Stabilisation and Restructuring programmes provided US dollars
to the Central Bank so that additional imports could be financed. This “programme
financing” gave USAID an additional resource, local currency programming, which
had been available only to a limited extent before 1982 (see Table 11.3). During the
1960s and 1970s, most USAID resources had directly funded the planned activities:
importing equipment, paying salaries, and covering other direct project costs.
Financing in the 1980s was different.
Table 11.3. Local Currency Programming, 1982-95 a
In millions dollars – 1994 equivalent
Sector Amount
Health 9
Education 32
Population 0
Environment 23
Food and agriculture 78
Economics/tradeb 664
Infrastructure/housing 196
Governance 73
Regional agricultural school 122
Other 72
Total 1 268
a) Mostly funds generated by sale of dollars provided for balance-of-payments support. These local currency funds
were owned mostly by the Costa Rican Government, but were jointly programmed.
b) Includes USD 337 million that was sterilised and USD 227 million for credit, much of which would have gone to
agriculture.
Source: Authors.
OECD 1999