Wednesday, February 18, 2009

Costa Rica gets rest of $300 million loan from China

Finance Minister Guillermo Zuniga San Jose, Costa Rica, (Reuters) - Costa Rica has received the rest of a low interest loan granted to the country by China in return for the Central American nation's move to break diplomatic ties with Taiwan and recognize Beijing in 2007.

China used some of its $1.8 trillion in official foreign exchange reserves to secretly loan Costa Rica $150 million in January 2008 at low interest rates as part of the deal between the two countries.

China had committed to lending a further $150 million, but doubts about Beijing's commitment to the loan surfaced after the deal was leaked in the media.

China and Taiwan, which Beijing regards as a renegade province, have long offered aid and development projects to small countries to try and win allies in their diplomatic struggle.

Costa Rica's Finance Minister Guillermo Zuniga told Reuters the funds were deposited on Friday.

"We are going to use it to pay debt. Expensive debt will be repaid with inexpensive debt," Zuniga said.

The 12-year loan carries an annual interest rate of 2 percent, Zuniga added.

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