The Executive Board of the International Monetary Fund (IMF) today completed its review of Colombia’s qualification for the arrangement under the Flexible Credit Line (FCL) and reaffirmed Colombia’s continued qualification to access FCL resources. The Colombian authorities have indicated that they intend to continue treating the arrangement as precautionary.
The current two-year SDR 3.87 billion (about US$5.96 billion) FCL arrangement was approved on June 24, 2013 (see Press Release No 13/229). Colombia’s first FCL arrangement was approved on May 11, 2009 (see Press Release No. 09/161), and two successor arrangements were approved on May 7, 2010 (see Press Release No. 10/186) and May 6, 2011 (see Press Release No. 11/165).
Following the Executive Board discussion of Colombia, Mr. David Lipton, Deputy Managing Director and Acting Chairman of the Board, made the following statement:
“The Fund’s Flexible Credit Line (FCL) arrangement with Colombia has helped reduce the perception of risks by providing Colombia with a buffer against adverse external shocks, and allowed Colombia to restore orderly financial market conditions despite increased volatility in financial markets over the past year. Today, the Executive Board reaffirmed that Colombia continues to meet the qualification criteria for access to FCL resources.
“Colombia has maintained a robust economic performance in recent years. This is underpinned by a very strong policy framework, anchored by an inflation-targeting regime, a flexible exchange rate, a sound fiscal rule, and effective financial supervision and regulation.
“At the same time, important downside risks remain for emerging market economies and they continue to present challenges even for strong and well-managed economies like Colombia. While Colombia has ample policy space to contain the fallout from normal external shocks, the additional buffer provided by the FCL arrangement would continue to play an important role in mitigating tail risks. The authorities remain committed to strengthening buffers, including international reserves, and plan to take further steps toward exit from the FCL arrangement when external conditions allow.”