Press Release: IMF Executive Board Approves US$3.46 billion Arrangement for Colombia Under the Flexible Credit Line
IMF News, May 7, 2010
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- Published: May 7, 2010
Purpose and eligibility of the FCL
- Established: The FCL was established on March 24, 2009 as part of a major reform of the Fund’s lending framework (Press Release No. 09/85).
- Intended use: Designed for crisis prevention purposes and to provide assurance that resources are available if needed.
- Eligibility: Available to countries that have demonstrated a very strong track record of sound macroeconomic policies and institutional frameworks; Colombia is the second country to formally request a successor FCL arrangement, following Mexico (Press Release No. 10/114).
IMF assessment and Acting Chair statement (Mr. John Lipsky)
- Macroeconomic performance and policy framework:
- Inflation was brought down to low single digits under the inflation targeting regime before the global crisis.
- The medium-term fiscal framework allowed for a substantial reduction in debt ratios.
- A flexible exchange rate and prudent debt management helped to reduce vulnerabilities.
- Strong prudential supervision and regulation have kept the financial system sound.
- Crisis response and financing:
- The strong policy framework allowed countercyclical monetary and fiscal policies in response to the global crisis.
- Authorities secured official external financing (including a one-year FCL for about US$10.5 billion) and took further steps to strengthen financial regulation.
- The domestic financial system did not experience major strains and the government maintained access to international capital markets at favorable terms.
- Recent developments and near-term outlook:
- Appropriate policies and improvement in global financial conditions led to resumed growth in mid-2009.
- The exchange rate has strengthened; equity prices have recovered from troughs seen at the height of the crisis; sovereign risk premia have declined.
- Outlook for 2010 is generally positive, with output growth expected to exceed 2 percent.
- Risks and prudence:
- Downside risks remain due to uncertainty over the strength of the global recovery and limited private sector demand response to stimulus in advanced economies.
- At the authorities’ request, the Executive Board approved a one-year arrangement under the FCL for 300 percent of quota, which the authorities intend to treat as precautionary.
- Conclusion of assessment:
- Colombia’s strong fundamentals, institutional framework, proven track record of sound macroeconomic policies, and the additional insurance from the FCL arrangement give confidence that the authorities are well prepared to manage risks and pressures if the global environment deteriorates.
Key statistics and references in the release
- Press Release No.: 10/186
- Date: May 7, 2010
- Arrangement size: SDR 2.322 billion (about US$3.46 billion)
- Earlier one-year FCL referenced: May 2009 (Press Release No. 09/161)
- FCL established: March 24, 2009 (Press Release No. 09/85)
- Mexico as prior successor FCL requester: (Press Release No. 10/114)
- Previously secured one-year FCL amount referenced: about US$10.5 billion
- Output growth expectation for 2010: expected to exceed 2 percent
- Approved access: one-year arrangement for 300 percent of quota
Press Release No. 10/186; May 7, 2010. International Monetary Fund.