The International Monetary Fund’s executive board agreed on Friday to extend a $6.22 billion credit line to Colombia, although Colombian officials do not intend to use it.
The two-year arrangement, done under the Flexible Credit Line, is a loan program that extends credit as a precaution. It is available to countries that have a good track record of sound macroeconomic policies.
John Lipsky, the first deputy managing director and acting chairman of the board, said the IMF agreed to extend the credit because “Colombia remains exposed to downside risks, including from severe commodity price fluctuations and other adverse external developments.”
“Under these circumstances, the authorities have requested a new FCL arrangement, which would provide appropriate insurance against shocks. The authorities intend to treat the arrangement as precautionary,” he added.
This is not the first time that Colombia has used this IMF loan program.
Its first agreement was approved on May 11, 2009 for about $10.5 billion, and a successor one-year arrangement was then approved on May 7, 2010.
“Colombia’s strong economic performance has been underpinned by a sound institutional framework and skillful macroeconomic management,” Lipsky said.