IMF board approves two-year $9.8b credit line for Colombia

WASHINGTON — The International Monetary Fund (IMF) Executive Board on Friday approved a two-year, $9.8 billion credit line for Colombia that the South American country can use to help its economy weather shocks from abroad.

"The new arrangement under the Flexible Credit Line will reinforce market confidence and provide added insurance against external risks," such as high inflation and the fallout from the war in Ukraine, IMF Deputy Managing Director Antoinette Sayeh said in a statement.

"The authorities intend to continue to treat this new arrangement as precautionary and to gradually phase out use of the instrument, conditional on a reduction of global risks."

The new credit line cancels a previous $17.2 billion arrangement agreed to in September 2020 to help the country cope with disruptions caused by the COVID-19 pandemic.

Colombia has had a Flexible Credit Line since 2009 and the IMF board has renewed it every two years, providing the country with money that could be deployed to head off a crisis.

Sayeh noted that Colombia "has very strong economic fundamentals" and "the authorities remain firmly committed to maintaining very strong macroeconomic policies going forward", noting its economy is recovering from the pandemic and the government is working to raise living standards.

"With a robust recovery underway but risks tilted to the downside, Colombia has taken steps to normalise policies from a crisis footing and manage higher inflation, while strengthening public finances and reducing external imbalances," she said in her statement.