IMF Approves Two-Year US$18.5 Billion Flexible Credit Line for Chile
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Loading... - Amelia Martin
- 13 Sep 2022
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The Executive Board of the International Monetary Fund (IMF) has approved a two-year arrangement for Chile under the Flexible Credit Line (FCL) in the amount of SDR 13.954 billion (about US$18.5 billion; 800 percent of quota).
The Chilean authorities intend to treat the FCL as precautionary. Given that the FCL can address all types of balance of payment needs, the Chilean authorities also notified the Fund of their decision to cancel the existing Short-term Liquidity Line (SLL) of SDR 2.529 billion (about US$3.3 billion; 145 percent of quota), an approach that is consistent with current Fund policies.
The FCL was established on March 24, 2009, as part of a major reform of the Fund’s lending framework. The FCL allows its recipients to draw on the credit line at any time and is designed to flexibly address both actual and potential balance of payments needs. Drawings under the FCL are not phased nor tied to ex-post conditionality as in regular IMF-supported programs.
The FCL will augment Chile’s precautionary reserve buffers on a temporary basis and provide substantial insurance against a broad range of risks, including from a possible abrupt global slowdown; commodity price shocks; spillovers from Russia’s war in Ukraine; or a sharp tightening of global financial conditions.
Chile qualifies for the FCL given its very strong economic fundamentals and institutional policy frameworks, a sustained track record of implementing very strong policies, and the authorities’ continued commitment to maintaining very strong policies in the future. Qualification criteria for an arrangement under the FCL are the same as for the SLL.
Following the Executive Board’s discussion on Chile, Ms. Kristalina Georgieva, Managing Director, issued the following statement:“After an impressive recovery from the fallout of the Covid-19 pandemic, Chile is facing a marked increase in global risks. Read More...
