Colombia’s central bank and Finance Ministry Wednesday requested a $3.5 billion flexible, one-year credit line from the International Monetary Fund, to replace the $10.4 billion line approved last year.
The requested amount is lower than the current line, the Colombian Central Bank said in a statement, citing that the “risk perception” has substantially weakened than in the previous year. The bank said economic growth in 2009 was higher than expected, and forecasts for 2010 were upgraded.
Still, the country may need the financing as it is yet unclear what effects the monetary and fiscal stimuli being ended in developed countries would bring.
John Lipsky, the first deputy managing director of the IMF, said the $3.5 billion credit line would provide a “useful insurance against external risks that are somewhat lower than a year ago.”
The IMF’s management will seek the approval by the fund’s executive board in early May.
“Colombia was not severely affected by the global crisis, and the impact was cushioned by timely countercyclical measures,” Lipsky said in a statement. He said he expects the Colombian economy to grow by more than 2% this year.
IMF created the flexible credit line to assist countries with sound economic policies, and those that don’t have to meet any conditions after getting access to credit, which the IMF hopes will help remove the stigma that its lending often carries.
The Central Bank said the Colombian government won’t use the credit line unless justified by external conditions. (Dow Jones)