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Press Release: IMF Executive Board Approves New Two-Year US$6.22 Billion Flexible Credit Line Arrangement for Colombia
May 6, 2011
The Executive Board of the International Monetary Fund today approved a successor two-year arrangement for Colombia under the Flexible Credit Line (FCL) in an amount equivalent to SDR 3.87 billion (about US$6.22 billion). The Colombian authorities stated that they intend to treat the arrangement as precautionary and do not intend to draw on the line.
Colombia’s first FCL was approved on May 11, 2009 (see Press Release No. 09/161) and a successor one-year arrangement was approved on May 7, 2010 (see Press Release No. 09/186).
Following the Executive Board discussion of Colombia, Mr. John Lipsky, First Deputy Managing Director and Acting Chairman of the Board, made the following statement:
“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; and 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. Furthermore, 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.
“In the authorities’ view, Colombia remains exposed to downside risks, including from severe commodity price fluctuations and other adverse external developments. Under these circumstances, the authorities have requested a new FCL arrangement, which would provide appropriate insurance against shocks. The authorities intend to treat the arrangement as precautionary.
“The Executive Board today approved Colombia’s request for a two-year arrangement under the FCL. 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.”
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