Press Release: IMF Executive Board Approves Successor Two-Year US$ 5.84 billion Flexible Credit Line for Colombia
IMF News, June 24, 2013
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Bibliographic details
- Published: June 24, 2013
Approval and arrangement details
- Press Release No.13/229; June 24, 2013.
- The Executive Board approved a new two-year arrangement for Colombia under the Flexible Credit Line (FCL) in an amount equivalent to SDR 3.87 billion (about US$5.84 billion).
- The Colombian authorities indicated that they intend to treat the new arrangement as precautionary and do not intend to draw on the line.
- Colombia’s first FCL was approved on May 11, 2009; successor arrangements were approved on May 7, 2010 and May 6, 2011.
Key findings and assessment from the IMF statement
- Colombia has very strong policy frameworks, comprising:
- an inflation-targeting regime,
- a flexible exchange rate,
- effective financial sector supervision and regulation,
- a fiscal policy guided by a structural balance rule for the central government.
- The authorities have a sustained track record of implementation of very strong policies, which have underpinned strong economic performance in recent years.
- Authorities are committed to maintaining these policies and to undertaking further initiatives—including the recently-approved tax reform—to:
- bolster growth,
- reduce inequality,
- further increase economic resilience.
- Macroeconomic performance and resilience:
- Colombia’s macroeconomic policies provided resilience to the global financial crisis and supported a strong recovery and gradual rebuilding of policy buffers.
- The exchange rate has played a key shock-absorbing role.
- The financial system has remained stable.
- The authorities have taken advantage of strong capital inflows to partially rebuild their international reserve position.
- Risks and role of the FCL:
- Risks to the global economic outlook remain elevated, and if they materialized, they would affect Colombia’s economy and external accounts.
- Access to the Fund’s FCL instruments will continue to play an important role in supporting the authorities’ macroeconomic strategy if that were to happen.
- A successor arrangement treated as precautionary will help Colombia to effectively manage potential shocks and sustain strong economic performance, while the authorities continue strengthening their policy framework and rebuilding policy buffers.
Background on the Flexible Credit Line (FCL)
- The FCL was established on March 24, 2009 and further enhanced on August 30, 2010.
- 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; 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.
Contact and media information
- IMF COMMUNICATIONS DEPARTMENT, Media Relations
- E-mail: media@imf.org
- Phone: 202-623-7100
Press Release No.13/229; June 24, 2013 — International Monetary Fund