IMF approves 2-year $35B credit deal with Mexico

By Ovunc Kutlu

ISTANBUL (AA) - The International Monetary Fund (IMF) announced Thursday its executive board approved a new two-year flexible credit line (FCL) arrangement with Mexico that is worth $35 billion designed for crisis prevention.

"Mexico qualifies for the FCL by virtue of its very strong economic fundamentals and institutional policy frameworks and track record of macroeconomic performance and policy implementation," it said in a statement.

"The authorities intend to continue to treat the arrangement as precautionary and will reassess the outlook for external risks and their implications for access under the FCL at the time of the mid-term review next year," it added.

The deal marks Mexico’s 10th FCL arrangement since 2009, according to the financial agency.

The arrangement approved in 2017 was for an original amount equivalent to approximately $88 billion, which was reduced to about $74 billion in 2018 at the request of the Mexican authorities, the IMF said.

The agency added that the arrangement approved in 2019 was for $61 billion, which was also reduced to $50 billion in the successor arrangement approved in 2021.

"The Mexican economy is in the midst of a broad-based expansion, with robust private consumption and investment," the IMF's First Deputy Managing Director and Acting Chair Gita Gopinath said in a statement.

"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," she added.

Gopinath, however, stressed that Mexico remains exposed to elevated external risks, such as renewed volatility in the financial markets, capital outflows from emerging markets, as well as weaker US growth and a global slowdown.