Statement by IMF Deputy Managing Director Nemat Shafik on Colombia’s Interest in a New Flexible Credit LinePress Release No. 13/155
May 6, 2013
Ms. Shafik, Deputy Managing Director of the International Monetary Fund (IMF), made the following statement today:
“I welcome the Colombian authorities’ interest in seeking a precautionary arrangement under the IMF’s Flexible Credit Line (FCL1), as a successor to the two-year FCL arrangement that was approved in May 2011.
“Colombia continues to have very strong economic policies and policy frameworks, including a credible inflation targeting regime, a flexible exchange rate, an effective financial sector supervisory and regulatory framework, and sound fiscal policies. These have allowed Colombia to mitigate the effects of the 2008‒09 global financial crisis, preserve macroeconomic stability, and maintain a robust economic performance.
“The outlook for 2013 is positive, with growth projected to exceed 4 percent and inflation to remain within the 2‒4 percent target band. However, downside risks remain significant, stemming mainly from external factors. A sharp worsening in global economic and financial conditions would adversely affect the outlook for Colombia’s exports, growth and financing needs.
“I share the authorities’ view that a successor FCL arrangement would provide Colombia with useful protection against external tail risks and as, with previous arrangements, allow the country to preserve policy flexibility, while strengthening its policy buffers further. I therefore intend to move ahead rapidly in seeking approval by the Fund’s Executive Board of Colombia’s request.”
1 The FCL was established on March 24, 2009 and further enhanced on August 30, 2010 (see Press Release Nos. 09/85 and 10/321). The FCL is available to countries with very strong fundamentals, policies, and track records of policy implementation and is particularly useful for crisis prevention purposes. FCL arrangements are approved for countries meeting pre-set qualification criteria. The FCL is a renewable credit line, which could be approved for either one or two years. Two-year arrangements involve a review of eligibility after the first year. If the country draws on the credit line, the repayment period is between three and five years. There is no cap on access to Fund resources under the FCL, and access is determined on a case-by-case basis. Qualified countries have the full amount available up-front, with no ongoing conditions. There is flexibility to either draw on the credit line at the time it is approved, or treat it as precautionary.