Colombia Asks for FCL After All

After Colombia’s finance ministry denied earlier this month the country would ask for a flexible credit line (FCL) from the IMF, yesterday the story changed. Dominique Strauss-Kahn, MD of the IMF, says in a statement that Colombia finance minister Oscar Zuluaga and central bank governor Jose Dario Uribe have expressed interest in a 1-year precautionary FCL arrangement for 900% of Colombia’s IMF quota, or a total of about $10.4bn. Colombia and Peru were seen as the most likely candidates for an FCL, following Mexico’s rally after it adopted the new facility. Mexico got a $47bn 1-year FCL, marking the first LatAm use of the new facility. The deal – equivalent to 10 times Mexico’s fund quota – along with expectations that the government will use a $30bn Fed swap arrangement to help corporates with external amortizations, boosted Mexican markets.