## IMF Executive Board Approves New Two-Year US$5.4 Billion Flexible Credit Line Arrangement for Peru

_IMF News, May 27, 2022_

## Source details

**Canonical URL:** [IMF Executive Board Approves New Two-Year US$5.4 Billion Flexible Credit Line Arrangement for Peru](https://www.imf.org/en/news/articles/2022/05/27/pr22173-peru-imf-executive-board-approves-fcl)

## Other formats

- [Markdown version](/en/news/articles/2022/05/27/pr22173-peru-imf-executive-board-approves-fcl/index.md)
- [Structured JSON version](/en/news/articles/2022/05/27/pr22173-peru-imf-executive-board-approves-fcl/index.json)
- [Bundle manifest](/en/news/articles/2022/05/27/pr22173-peru-imf-executive-board-approves-fcl/bundle-manifest.json)

## Bibliographic details
- Published: May 27, 2022

---

### Arrangement approval and terms
- The Executive Board approved a successor two-year arrangement for Peru under the Flexible Credit Line (FCL) in an amount equivalent to SDR 4.0035 billion (about US$ 5.4 billion).
- The Board noted the cancellation by Peru of the previous arrangement in the amount of SDR 8.07 billion.
- The Peruvian authorities stated their intention to treat the new arrangement as precautionary.
- The lower credit line request reflects better economic and external reserve positions and the authorities’ strategy of gradually exiting the facility.
- [1] Dollar amount based on the Special Drawing Right (SDR) quote of 1 USD = SDR 0.74121 on May 27, 2022

### Rationale for qualification
- Peru qualifies for the FCL by virtue of:
  - its very strong economic fundamentals and institutional policy frameworks,
  - a track record of implementing very strong policies,
  - commitment to maintaining such policies.
- The country’s very strong fundamentals include the accumulation of additional buffers with international reserves and a decline in external financing needs since the 2020 arrangement.

### Features 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:
  - allows recipients to draw on the credit line at any time,
  - is designed to flexibly address both actual and potential balance of payments needs to help boost market confidence,
  - permits large, upfront access with no ex-post conditionality,
  - does not phase drawings nor tie them to ex-post conditionality as in regular IMF-supported programs.
- The absence of ex-post conditionality is justified by the very strong policy fundamentals, institutional frameworks, and sustained track records of qualifying countries.

### Statement by Deputy Managing Director (Kenji Okamura)
- Peru’s very strong economic fundamentals and policy frameworks are anchored by:
  - a credible inflation targeting framework,
  - a flexible exchange rate,
  - effective financial sector supervision and regulation,
  - a solid medium-term fiscal framework.
- These foundations enabled the authorities to deliver a comprehensive and timely response to the COVID-19 pandemic and promote growth.
- Peru’s economy recovered strongly in 2021, registering one of the highest growth rates in the region, spurred by:
  - robust external demand,
  - favorable terms of trade,
  - a surge in construction.
- The FCL arrangement will continue to support the authorities’ macroeconomic strategy by providing insurance against tail risks and bolstering market confidence.
- The authorities intend to treat the arrangement as precautionary and exit the arrangement when external conditions allow.
- The level of access requested—300 percent of quota, down from 600 percent in the FCL approved in 2020—reflects:
  - the country’s very strong fundamentals,
  - accumulation of international reserve buffers,
  - decline in external financing needs since the 2020 arrangement,
  - and the authorities’ strategy of gradually phasing out the use of the facility.

### Risks and external vulnerabilities cited
- Elevated risks to the Peruvian economy include:
  - renewed waves of the COVID-19 pandemic,
  - slowing economic activity in key trade partner countries,
  - the war in Ukraine,
  - tighter global financial conditions,
  - political uncertainty.

### Key numeric facts
- Arrangement duration: two-year arrangement.
- Approved amount: SDR 4.0035 billion (about US$ 5.4 billion).
- Previous arrangement cancelled: SDR 8.07 billion.
- Access requested in 2022 arrangement: 300 percent of quota.
- Access in 2020 arrangement: 600 percent of quota.
- SDR to USD conversion used: 1 USD = SDR 0.74121 on May 27, 2022.

*IMF Press Release No. 22/173, May 27, 2022*

---


## References

- [Peru and the IMF](http://www.imf.org/external/country/PER/index.htm)
- [Press Releases](https://www.imf.org/en/news/searchnews)
- [PRESS CENTER](http://presscenter.imf.org/)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2022/05/27/pr22173-peru-imf-executive-board-approves-fcl_