The International Monetary Fund approved on Friday a new Flexible Credit Line (FCL) agreement for two years with Colombia for 9.8 billion dollars, which the South American country can use to face external shocks.
“The new agreement under the FCL will strengthen the confidence of the markets and provide an additional safeguard against external risks”, such as inflationary pressures and the uncertainty associated with the war in Ukraineexplained the deputy managing director of the IMF, Antoinette Sayeh, in a statement.
“The authorities intend to continue to assign this new agreement a precautionary character and to progressively reduce the use of this instrument, to the extent that global risks diminish,” he added.
LCF’s new agreement with Colombia cancels a previous one of 17,200 million dollars approved in September 2020 to help the country to face the disturbances caused by the Covid-19 pandemic.
Colombia, the fourth Latin American economy, has had access since 2009 to FCLa type of loan designed for crisis prevention, not subject to conditions and granted to countries with good economic performance.
The IMF He highlighted the soundness of Colombia’s economic fundamentals and the commitment of the authorities to maintain those policies, and said that the economy is recovering from the effects of the pandemic.
“Colombia has fvery solid economic fundamentals and policy frameworks anchored in a credible inflation targeting regime, a strong medium-term fiscal rule, a flexible exchange rate, and effective financial sector supervision and regulation,” Sayeh explained.
It also noted measures to manage the increase in inflationstrengthen public finances and reduce external imbalances and pointed out that international reserves “remain adequate”.
But he warned that the country remains vulnerable to external risks and stressed that this new LCF will strengthen the confidence of the markets.
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