Peru Exits the Flexible Credit Line Arrangement with the IMF

IMF News, May 21, 2024

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The Peruvian authorities notified the IMF of their intention to let the current Flexible Credit Line (FCL) arrangement expire on May 26, 2024 and not to seek a successor FCL arrangement.
The current FCL was approved by the IMF’s Executive Board on May 27, 2022.
This decision was described as expected, given the authorities’ prior intention to exit the arrangement conditional on evolution of external risks.

Peru’s initial FCL arrangement of 600 percent of quota was approved in May 2020.
Peru reduced its access to 300 percent of quota in a successor arrangement approved in May 2022 amid improved international reserves and lower external financing needs.
Over the FCL period, Peru treated both arrangements under the FCL as precautionary and:
- continued to maintain its strong foreign exchange reserves;
- maintained low public debt;
- upheld a prudent fiscal position.
At the May 2023 midterm review of the current FCL, Peruvian authorities reiterated their intention to exit the FCL conditional on the evolution of external risks.

At the conclusion of the 2024 Article IV Consultation on May 20, 2024, the IMF’s Executive Board:
- commended the authorities for very strong economic fundamentals and institutional policy frameworks;
- commended a sustained track record of implementing very strong macroeconomic policies despite political turmoil;
- noted the authorities’ commitment to maintaining such policies in the future.
The Board also noted that maintaining very strong institutions and policies would further strengthen and reinforce Peru’s resilience against external risks.

The FCL instrument was established on March 24, 2009, and further enhanced on August 30, 2010 and October 6, 2023.
Key operational features of the FCL:
- designed for crisis prevention and mitigation;
- provides qualifying members flexibility to draw on the credit line or treat it as precautionary;
- disbursements are neither phased nor conditioned on compliance with policy targets as in traditional IMF-supported programs;
- available to qualified countries with very strong fundamentals, institutional policy frameworks, and track records of policy implementation;
- renewable and can be approved for either one or two years;
- there is no cap on access to Fund resources under the FCL; access is determined on a case-by-case basis.

Current FCL arrangement approval date: May 27, 2022.
Intended expiration date of current FCL: May 26, 2024.
Initial FCL access in May 2020: 600 percent of quota.
Successor FCL access in May 2022: 300 percent of quota.
IMF membership and quota for Peru: SDR 1,334.5 million (about US$ 1,761 million).
Relevant IMF consultation conclusion date: May 20, 2024.
FCL establishment and enhancement dates: March 24, 2009; August 30, 2010; October 6, 2023.

Press Release No. 24/174