## Press Release: IMF Executive Board Approves New Two-Year US$88 Billion Flexible Credit Line Arrangement with Mexico

_IMF News, May 27, 2016_

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## Bibliographic details
- Published: May 27, 2016

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### Approval and key figures
- The Executive Board approved a successor two-year arrangement for Mexico under the Flexible Credit Line (FCL) in an amount equivalent to SDR 62.389 billion (about US$88 billion).
- The previous arrangement (SDR 47.292, about US$67 billion) was canceled.
- The Mexican authorities stated their intention to treat the arrangement as precautionary.

### Purpose and design of the Flexible Credit Line (FCL)
- The FCL was established on March 24, 2009 as part of a major reform of the Fund’s lending framework.
- The FCL is designed for crisis prevention purposes and provides the flexibility to draw on the credit line at any time.
- Disbursements under the FCL:
  - Are not phased.
  - Are not conditioned on compliance with policy targets as in traditional IMF-supported programs.
- Flexible access is justified by the very strong track records of countries that qualify for the FCL, which gives confidence that their economic policies will remain strong.

### Mexico’s FCL history
- Mexico’s first FCL arrangement was approved on April 17, 2009.
- Successor arrangements were approved on:
  - March 25, 2010
  - January 10, 2011
  - November 30, 2012
  - November 26, 2014

### Executive Board discussion — Statement by Mr. David Lipton, First Deputy Managing Director and Acting Chair
Findings on Mexico’s policy framework and economic conditions:
- “Mexico’s macroeconomic policies and policy frameworks remain very strong.”
- Monetary policy: guided by an inflation-targeting framework in the context of a flexible exchange rate.
- Fiscal policy: underpinned by the fiscal responsibility law; authorities are committed to a consolidation path that would put the public debt-to-GDP ratio on a downward trajectory over the medium term.
- Financial system: the financial regulatory and supervisory framework is strong.
- Structural reforms: medium-term growth should benefit from a range of ongoing structural reforms.
- Current economic performance: “Economic activity is growing at a steady pace, inflation is low and stable, and the financial system is sound.”

External risks and rationale for higher access:
- Mexico’s economy remains exposed to external risks, given its close ties with the global economy.
- Downside risks to global growth have risen, and volatility in global financial markets has increased.
- The new FCL arrangement, with a higher level of access, will:
  - Provide insurance against greater external risks.
  - Bolster market confidence.
  - Continue to play an important role in supporting the authorities’ macroeconomic strategy.

Authorities’ commitments and intended use of the FCL:
- Commitments to enhance resilience to external shocks further through:
  - Steady implementation of the fiscal consolidation plans.
  - Continued anchoring of inflation expectations.
  - Gradual rebuilding of reserve buffers.
  - Strong oversight of the domestic financial system.
- The authorities do not intend to make permanent use of the FCL.
- As global risks facing emerging markets recede, the authorities intend to reduce access under the FCL in the future, with a view to phasing out Mexico’s use of the instrument.

*Source: Press Release No. 16/250 — IMF Communications Department, May 27, 2016*

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## References

- [Mexico and the IMF](http://www.imf.org/external/country/MEX/index.htm)
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- [PRESS CENTER](http://presscenter.imf.org/)
- [Press Release No. 09/85](https://www.imf.org/external/np/sec/pr/2009/pr0985.htm)
- [Press Release No. 09/130](https://www.imf.org/external/np/sec/pr/2009/pr09130.htm)
- [Press Release No. 10/114](https://www.imf.org/external/np/sec/pr/2010/pr10114.htm)
- [Press Release No. 11/4](https://www.imf.org/external/np/sec/pr/2011/pr1104.htm)
- [Press Release No. 12/465](https://www.imf.org/external/np/sec/pr/2012/pr12465.htm)
- [Press Release No. 14/543](https://www.imf.org/external/np/sec/pr/2014/pr14543.htm)
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_Source: https://www.imf.org/en/news/articles/2015/09/14/01/49/pr16250_