State-run banks in Costa Rica and the country's national insurance institute INS have united to support the government's request for legislative approval to issue sovereign bonds in the international market, El Financiero reported.

In a press conference on March 18, executives from Banco Nacional de Costa Rica, Banco Popular y de Desarrollo Comunal SA, Banco de Costa Rica and the INS called for urgent measures to resolve the "critical situation" of public finances.

Failure by Costa Rican legislators to approve the international financing could lead to a loss of economic competitiveness and may result in domestic interest rates rising by as much as 30 basis points, the banking industry executives said.

"It would discourage private investment while, at the same time, increase the cost of credit for families and workers, generating a direct impact on the economy," they said in a joint statement.

The absence of the legislative approval could also have other undesirable effects, including greater pressure on liquidity, a reduction in credit to the private sector, and higher unemployment and poverty, the bank officials said.