Costa Rica’s banking sector is poised for continued, albeit moderate, growth in 2026, but a shift in credit dynamics is underway. While overall credit expansion is projected to accelerate, the pace of dollar-denominated lending is slowing, while loans in colones are gaining momentum. This trend is being actively shaped by both macroeconomic factors and deliberate policy adjustments by the Central Bank and financial institutions.
The Central Bank of Costa Rica (BCCR) forecasts a 6.9% increase in total credit to the private sector in 2026, exceeding the 5.4% growth recorded in 2025, according to its latest Monetary Policy Report. Looking ahead to 2027, the BCCR anticipates a further increase to 7.2%, though at a slightly more restrained pace than the projected jump between 2025 and 2026.
However, this overall growth masks a significant divergence in currency trends. Credit in colones is expected to experience a substantial increase, while dollar-denominated loans are projected to decelerate. The BCCR projects colón-denominated credit to rise from 5.4% in 2025 to 6.9% in 2026, and further to 8.3% in 2027. Conversely, dollar loans are expected to grow by 6% in 2026, a slowdown from the 7.1% registered in 2025, with a further deceleration to 5% projected for 2027.
This shift is partly attributable to a new regulatory framework, which incentivizes borrowing in colones. Hazel Valverde, head of the General Superintendency of Financial Entities (Sugef), noted that the new regime tends to favor loan applications denominated in the local currency. Financial institutions are exhibiting increased caution when extending dollar loans to individuals or businesses without corresponding foreign currency income streams.
“There is much more awareness among financial entities about the risks involved in lending in a currency different from the borrower’s income,” Valverde stated. This increased risk aversion is contributing to the preference for colón-denominated loans.
The deceleration in dollar-denominated credit follows a period of accelerated growth, with loan balances increasing at double-digit rates in previous years. This earlier surge had prompted concern within the Central Bank, which views high dollarization as a potential source of financial instability.
From a macroprudential perspective, this slowdown is viewed positively, as high dollarization increases the financial system’s exposure to exchange rate risk, the BCCR noted in its report. The BCCR also pointed out that the deceleration in dollar lending aligns with a reduction in the cost of borrowing in colones, given the current interest rate environment.
The shift in credit dynamics also comes against a backdrop of a strengthening colón. , the reference buy rate for the colón hit ₡471.99 and the sell rate ₡476.41, levels not seen in years. The Central Bank has been actively intervening in the foreign exchange market, purchasing $277.32 million in the first weeks of 2026, including $216.15 million to cover needs of the non-banking public sector and $61.17 million to bolster reserves, in an effort to curb the colón’s appreciation. This intervention is a response to a surplus of dollars in the private market, driven by robust exports in services and manufacturing, tourism inflows, and foreign investment.
Moody’s Local has warned that the high level of dollarization in Costa Rica’s credit portfolio poses a risk to loan quality, given the significant proportion of loans granted to borrowers with foreign exchange exposure. As of the end of 2025, the dollar-denominated loan portfolio represented 27% of the total banking system, largely concentrated in private banks, with 65% of credit granted to borrowers with foreign exchange exposure. Under scenarios of significant colón depreciation, Moody’s warns, loan quality could deteriorate and capital positions could come under pressure, particularly for smaller institutions and those with larger dollar exposures.
Despite these risks, the Costa Rican banking sector is expected to remain stable throughout 2026. The gross loan portfolio grew by 5.5% by the end of 2025, down from 8.1% in 2024, but still below nominal GDP growth of 8%.
José Antonio Vásquez Rivera, Corporate Finance Director at Banco Nacional, confirmed the trend, stating that the bank observes a structural change with a deceleration in dollar demand compared to previous years. He clarified that the credit figures published by the BCCR represent the potential supply of loans, based on the maximum amount of lending resources the Central Bank estimates the economy will have available after deducting government needs, and therefore is not directly comparable to the bank’s own demand estimates.
Banco de Costa Rica (BCR) also anticipates credit growth in 2026, driven by the performance of the services, manufacturing, commerce, real estate, and tourism sectors, as well as increased focus on retail and small and medium-sized enterprises (SMEs). BCR expects the increase in colón-denominated loans to be supported by stable interest rates, low inflation, and an expectation of continued low interest rates throughout the year.
As of the end of 2025, the total credit to the private sector stood at ¢25.74 trillion. Of this, ¢17.46 trillion was in colones and $16.645 million (equivalent to ¢8.28 trillion) was in dollars. The evolving credit landscape in Costa Rica reflects a complex interplay of monetary policy, regulatory changes, and macroeconomic conditions, with implications for both borrowers and lenders in the years ahead.
