Press Release: IMF Executive Board Approves New Two-Year US$6.22 Billion Flexible Credit Line Arrangement for Colombia

IMF News, May 6, 2011

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Canonical URL: Press Release: IMF Executive Board Approves New Two-Year US$6.22 Billion Flexible Credit Line Arrangement for Colombia

The Executive Board approved a successor two-year arrangement for Colombia under the Flexible Credit Line (FCL).
Amount: SDR 3.87 billion (about US$6.22 billion).
Duration: two-year arrangement.
The Colombian authorities stated they intend to treat the arrangement as precautionary and do not intend to draw on the line.
Date of release: May 6, 2011.

Colombia’s first FCL was approved on May 11, 2009 (Press Release No. 09/161).
A successor one-year arrangement was approved on May 7, 2010 (Press Release No. 09/186).

Colombia’s strong economic performance has been underpinned by a sound institutional framework and skillful macroeconomic management.
Countercyclical policy support has paved the way for the recovery.
A credible inflation targeting regime has anchored inflation expectations.
Exchange rate flexibility has cushioned the impact of external shocks and large capital inflows.
Strong supervisory and regulatory oversight has underpinned the soundness of the domestic financial system.
FCL arrangements in 2009 and 2010 have contributed to preserving sentiment and market access.
In view of the favorable near-term outlook, the authorities intend to unwind fiscal support and normalize monetary conditions as the recovery becomes self-sustaining and slack is taken up.
Fiscal reforms in train will also strengthen the medium-term budgetary framework and economic prospects.
The authorities view Colombia as exposed to downside risks, including from severe commodity price fluctuations and other adverse external developments.
Under these circumstances, the authorities requested a new FCL arrangement to provide appropriate insurance against shocks and intend to treat it as precautionary.
The augmented duration and size of this successor FCL—new features made possible by the recent IMF facilities reform—will allow the FCL to play an even stronger role in insuring Colombia against external risks while continuing to support the authorities’ overall macroeconomic strategy.

International Monetary Fund — Press Release No. 11/165