The International Monetary fund (IMF) welcomed Colombia’s interest in a new flexible credit line of $6.1 billion to protect the Andean nation’s growing economy from external risks, U.S financial news service Bloomberg reported Friday.
John Lipsky, IMF’s deputy managing director, praised Colombia’s sound macroeconomic management saying they provided authorities with policy space to respond to the adverse shocks of the global crisis.
The two year “precautionary” credit line is the third for Colombia. In May 2009 a $10.5 million credit line was extended to Colombia by the IMF and renewed in May 2010 as a $3.5 million credit line.
Lipsky also warned that risks relating to the uncertainty of global markets remain significant and would have an impact on Colombia’s exports and financial growth.
He nonetheless fully agrees with the Colombian authorities that the amount proposed would give the country “effective protection against the risk of extreme external events.”
Alberto Ramos, an economist at Goldman Sachs group believes that Colombia’s macro fundamentals and their favourable access to international capital markets mean that such insurance would not even be needed if the economy is hit by negative external shocks.
Colombia’s investment grade was recently raised one step to BBB- by rating agency Standard & Poors.
Colombia’s economy expanded by 4.3% last year and is on track to grow as much as 6% this year, according to the Finance Minister Juan Carlos Echeverry. The IMF have a more conservative prediction of 4.6%.