Press Release: IMF First Deputy Managing Director John Lipsky Welcomes Colombia’s Interest in a New Flexible Credit Line
April 8, 2011Press Release No. 11/123
April 8, 2011
Mr. John Lipsky, First Deputy Managing Director of the International Monetary Fund (IMF), made the following statement today in Washington:
“I welcome Colombia’s indication that the country will seek a new two-year precautionary arrangement under the IMF’s Flexible Credit Line (FCL) for an amount of SDR 3.9 billion (equivalent to US$ 6.1 billion or 500 percent of quota).
“The Colombian economy weathered the global crisis well, and a recovery is underway. Well-timed countercyclical monetary and fiscal policies helped mitigate the domestic effects of the global crisis. Sound macroeconomic management provided the authorities with policy space to respond to the adverse shocks. Following a short-lived contraction, economic activity started to recover in the second half of 2009, supported by a large fiscal and monetary stimulus. Activity gained further momentum in 2010, with growth estimated to have reached 4.3 percent for the whole year.
“Overall, the outlook for 2011 remains positive, with growth expected to be 4.6 percent, supported by strong private consumption and an expected upturn in the world economy. Nevertheless, downside risks remain significant. The resilience and strength of the global economic recovery remains unclear and other global events have increased the overall degree of uncertainty in markets. An adverse shock to global growth would impact the outlook for Colombia’s exports, growth and financing needs.
“I share the authorities’ view that a successor two-year FCL arrangement at the proposed amount would provide Colombia with useful protection against external tail risks and, as with previous arrangements, allow the country to preserve policy flexibility in the face of global and regional uncertainties, while maintaining continuous access to capital markets at favorable terms. I therefore intend to move ahead rapidly in seeking approval by the Fund’s Executive Board of Colombia’s request in early-May.”
Colombia’s first FCL arrangement was approved on May 11, 2009 (see Press Release No. 09/161). A second arrangement was approved on May 7, 2010 (see Press Release No. 10/186). The FCL is an instrument established on March 24, 2009 that is available to Fund member countries deemed to possess very strong fundamentals, policies, and track records of policy implementation. Access to FCL resources is based on the requesting country having met pre-set qualification criteria, and disbursements are not conditioned on implementation of specific policy targets or meeting quantitative criteria. (see Factsheet for more information on the FCL and the qualifying criteria).