IMF renews Flexible Credit Line for Mexico

The International Monetary Fund (IMF) renewed the Flexible Credit Line that the Mexican government has contracted for two more years.

According to the Ministry of Finance and Public Credit (SHCP) and the Bank of Mexico (Banxico), the Flexible Credit Line is for an access amount equivalent to 26.7381 billion special drawing rights, this is approximately 35 billion of dollars.

This is a lower amount than what was had in 2021, for 50 billion dollars, at the request of the Mexican authorities.

The Flexible Credit Line for Mexico for two more years constitutes recognition of the solidity of the institutional framework for macroeconomic policies,” said the Treasury and Banxico.

For its part, the IMF recognized that the Mexican economy is in the midst of a broad expansion, with robust private consumption and investment.

While Mexico’s macroeconomic policies and institutional policy frameworks remain very strong, with a flexible exchange rate regime, a credible inflation targeting framework, a fiscal responsibility law, and a well-regulated financial sector.

He considered that the authorities’ policies have remained prudent, where monetary policy has focused on containing inflationary pressures, while fiscal policy has kept public debt under control.

These efforts must continue, accompanied by supply-side reforms to address existing obstacles… Therefore, Mexico continues to meet all qualification criteria for the Flexible Credit Line (FCL),” the IMF stated.

The international organization recalled that this is the tenth time that it has agreed to grant the Flexible Credit Line, which began in 2009, during the six-year term of Felipe Calderón, for an amount of 88 billion dollars to face the attacks of the financial crisis due to the bankruptcy of Lehman Brothers.

In November 2017, the government of Enrique Peña Nieto requested a reduction in the amount, to reach 74 billion dollars.

This six-year term requested another reduction in 2019, to reach 61 billion and in 2021 it was around 50 billion dollars.