|IMF to Increase Line of Credit to Mexico|
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December 14, 2010
Mexico City – Mexico on Tuesday asked the International Monetary Fund to increase its flexible line of credit to 73 billion dollars, as it grapples with the continued impact of global recession.
The request is a marked increase from last year, when the IMF approved a flexible credit line of some 47 billion dollars for Mexico.
IMF director Dominique Strauss-Kahn, after meeting with President Felipe Calderon, said he intends to "move ahead rapidly in seeking approval by the fund's executive board" for Mexico's request.
He said he welcomed Mexico's bid to boost its current one-year Flexible Credit Line facility with a two-year, 73-billion-dollar precautionary FCL arrangement.
The arrangement was being described as the largest precautionary FCL ever awarded by the IMF.
"While Mexico was significantly affected by the global financial crisis, the authorities responded resolutely and effectively, and a recovery is now underway," Strauss-Kahn said in a statement.
"Nonetheless, important uncertainties remain in the global environment, and I share the authorities' view that the longer duration and higher access available under the reformed FCL can play an important role in continuing to support Mexico's policy strategy and in maintaining external confidence."
He said that in the past 18 months Mexico had "put in place very strong policy frameworks, including inflation targeting, a flexible exchange rate regime and a balanced budget rule, while important fiscal reforms have been passed."
Only two other countries, Poland and Colombia, have established precautionary arrangements under the FCL, a process established in early 2009 for nations with strong economic fundamentals and which seek to beef up their crisis-prevention mechanisms.
Mexico's export-driven economy plunged 6.5 percent last year as markets shriveled, particularly in top trading partner the United States, amid the global financial crisis.
But it has steadily clawed back, and in September this year Mexico's government raised its full-year GDP growth forecast for 2010 to 4.5 percent, helped by a pick-up in US demand in the first quarter.