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Mexico, with strong institutional and economic policies: IMF

The International Monetary Fund (IMF) recognized that Mexico has solid economic fundamentals and very strong institutional policy frameworkswhich is why it determined that it meets the criteria to maintain access to the flexible credit line (LCF) for 35 billion dollars, an instrument that has not been used until now, but serves as a backup.

Within the framework of Article 4 of the Constitutive Agreement of the international organization, the conclusions of the IMF technical team that visited the country to collect and analyze economic information were presented.

As a result of the report, the Board of Executive Directors determined that 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..

Although the IMF noted that the Mexican economy is moderating, it recognized that the sustained track record of very solid policies and economic fundamentals has helped Mexico maintain a strong macroeconomic position.

Public debt remains relatively low, proactive monetary policy is reducing inflation and the benefits of a realignment of global supply chains could be materializinghe indicated.

The international body also recognized the country’s sustainable external position, adequate level of reserves, history of access to capital markets on favorable terms, healthy public finances, including a sustainable public debt position and a well-capitalized financial system and liquid that remains robust in the face of systemic risks and effective supervision.

Warns about risks due to judicial reform

However, the report also warns of risks, such as “recent changes in the Judiciary – and possible additional constitutional amendments.”

Despite this, the board considered that the country is still a candidate to access the LCF, an instrument that is not a loan, but rather insurance. against extreme risks that is available for the country if needed. So far it has not been used.

The Exchange Commission, which is made up of the Ministry of Finance and Public Credit (SHCP) and the Bank of Mexico (BdeM), explained that the amount of the LCF is equivalent to 35 billion dollars.

This is the eleventh renewal of this instrument, since it was first requested in 2009 and has been reduced from 47 billion dollars.

This measure reinforces the country’s position in the face of international volatility scenariossaid the commission, which also reiterated that it will continue with the gradual and orderly exit strategy of the LCF, announced in 2017.

The IMF Executive Board highlighted that the government of Claudia Sheinbaum Pardo expressed that current access to the LCF remains useful in ensuring a timely and adequate buffer to mitigate external risks should they materialize.

The authorities reaffirm their commitment to prudent macroeconomic policies that contribute to financial stability and sustainable and inclusive economic growthconcluded the Exchange Commission.

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