Mexico Rolls Over IMF Line

The IMF has approved a successor 1-year arrangement for Mexico under its flexible credit line (FCL) in an amount equivalent to about $48bn. “The Mexican authorities stated they intend to treat the arrangement as precautionary and do not intend to draw on the line,” says the fund. The FCL is designed for crisis prevention purposes and provides flexibility to draw at any time. Disbursements are not phased nor 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, says the fund. “Mexico’s very strong policy frameworks and economic fundamentals, together with the additional insurance provided by the successor arrangement under the FCL, put Mexico in a very strong position to deal with other potential risks that could arise in the period ahead as the global economy continues to gradually recover from the crisis,” says John Lipsky, first deputy MD and acting chairman of the IMF board. “Mexico has a sustained record of sound economic policies, and has very strong economic fundamentals and frameworks,” he adds. Lipsky also notes that sizeable downside risks still confront the global economy.