IMF Backs Smaller $50 Billion Credit Line to Mexico as Risks Ebb

(Bloomberg) -- The International Monetary Fund’s executive board approved a $50 billion credit line for Mexico, reducing the amount it extended in previous years as it argues that the nation’s economic prospects have improved.

The two-year flexible credit line, which is designed for crisis prevention, is Mexico’s ninth such consecutive agreement, and is about 20% less than the amount approved under the previous arrangement with the Fund in 2019.

“The Mexican economy is rebounding from its deepest recession in decades, spurred by strong U.S. growth and rising vaccination rates,” Geoffrey Okamoto, IMF first deputy managing director and acting chair, said in a statement. “The authorities have successfully maintained external, financial, and fiscal stability, despite the pandemic-related challenges.”

Mexico was the first country in the world to get the credit line when it was created in 2009 during the global financial crisis and has been voluntarily reducing its access in the last several years. Bloomberg reported earlier on the possible reduction of the credit line from the current amount of about $63 billion. 

Read More: Mexico, IMF Weigh Reducing $63 Billion Credit Line as Risks Ease

The flexible credit line is a form of pre-approved lending and comes without conditions on how the money is spent. The IMF has used the FCL over the past decade to build a safety net under some of the most stable economies in Latin America, one of the global regions hit hardest by the pandemic last year.

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