IMF approves new $9.8 billion flexible credit line for Colombia

NEW YORK (Reuters) – The International Monetary Fund on Friday approved a $9.8 billion Flexible Credit Line (FCL) for Colombia, which the South American country said will be treated as “precautionary,” the IMF said in a statement.

“Colombia qualifies for the (FCL) by virtue of its very strong economic fundamentals and institutional policy frameworks and track record of implementing very strong policies and commitment to maintaining such policies,” the Fund said.

The Andean country last drew about $5.4 billion on December 2020 from an FCL agreement approved earlier that year to address the COVID-19 pandemic, and did not withdraw from FCLs approved in 2016 and 2018, IMF data show.

The Fund said Colombia remains vulnerable to external risks including inflationary pressures and a spike in risk premia, and this new credit line will reinforce market confidence in the oil exporter.

Colombia’s central bank applauded the approval and said it serves as a cushion in case of emergency, along with the country’s $58 billion in international reserves.

“The line is precautionary and in principal they are resources that won’t be used but it is very important to have them in case of a crisis situation occasioned by circumstances outside of our country,” central bank board chief Leonardo Villar said.

“They are resources which make international investors, international lenders willing to lend to us when we need because they know we have this cushion for unexpected circumstances,” he added.

Colombia’s economy grew a record 10.6% last year after shrinking 6.8% in 2020 amid the coronavirus pandemic. The government projects the economy will expand 5% this year.

(Reporting by Andrea Shalal and Rodrigo Campos, additional reporting by Nelson Bocanegra in Bogota; Editing by Chizu Nomiyama)