IMF approves new $9.8 billion flexible credit line for Colombia | Investment News
NEW YORK (Reuters) – The International Monetary Fund on Friday approved a $9.8 billion flexible credit line (FCL) for Colombia, which the South American country said will be treated as “precautionary”, a the IMF said in a statement.
“Colombia qualifies for the (FCL) because of its very strong economic fundamentals and institutional policy frameworks and its track record of implementing very strong policies and its commitment to maintaining those policies,” the Fund said. .
The Andean country last pulled around $5.4 billion in December 2020 from an FCL deal approved earlier that year to deal with the COVID-19 pandemic, and has not pulled out of the FCLs approved in 2016 and 2018, according to IMF data.
The Fund said Colombia remains vulnerable to external risks, including inflationary pressures and a spike in risk premia, and that this new line of credit will bolster market confidence in the oil exporter.
Colombia’s central bank applauded the approval and said it served as an emergency cushion, along with the country’s $58 billion in international reserves.
“The line is precautionary and in principle these are resources that will not be used but it is very important to have them in the event of a crisis situation caused by circumstances outside our country”, declared the head of the council of administration of the central bank Leonardo Villar.
“These are resources that international investors, international lenders are ready to lend to us when we need them because they know we have this cushion for unforeseen circumstances,” he added.
Colombia’s economy recorded record growth of 10.6% last year after shrinking 6.8% in 2020 amid the coronavirus pandemic. The government expects the economy to grow by 5% this year.
(Reporting by Andrea Shalal and Rodrigo Campos, additional reporting by Nelson Bocanegra in Bogota; Editing by Chizu Nomiyama)
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