IMF approves new credit line for Colombia

The International Monetary Fund on Monday approved a new multibillion-dollar credit line for Colombia to help protect it from a potential downturn in the global economy. The IMF executive board gave the green light for a two-year $5.84 billion Flexible Credit Line, the Fund said. "The Colombian authorities indicated that they intend to treat the new arrangement as precautionary and do not intend to draw on the line," it said. Colombia's first credit line was approved in May 2009, and was followed by two other credit lines, in May 2010 and May 2011. The country did not draw on those safety nets. "Colombia has very strong policy frameworks, comprising an inflation-targeting regime, a flexible exchange rate, effective financial sector supervision and regulation, and a fiscal policy guided by a structural balance rule for the central government," David Lipton, the IMF's first deputy managing director, said in the statement. He noted that the authorities had taken advantage of strong capital inflows to partially rebuild their international reserve position following the 2008 global financial crisis. "However, risks to the global economic outlook remain elevated, and if they materialized, they would affect Colombia's economy and external accounts," he said. The IMF safety net is available to countries with strong fundamentals and track records and carries no ongoing conditions. If tapped, the repayment period is between three and five years.