MercoPress. South Atlantic News Agency

Colombia requests 10.4 billion from IMF flexible credit line

Colombia became the third country to seek access to a new IMF credit line for strong performing countries, requesting 10.4 billion US dollars to bolster its economy in the face of the global recession.

Finance minister Óscar Iván Zuluaga and central bank governor José Darío Uribe announced that Colombia is interested in a one-year precautionary arrangement under the IMF’s Flexible Credit Line (FCL). A credit line of 10.4 billion would represent 900% of Colombia’s IMF quota.

The IMF recently approved a precautionary credit line of 47 billion USD from Mexico and is scheduled to discuss a request by Poland for 20.5 billion.

“I am very pleased by this positive response to the invitation I extended to strongly performing economies to use this new instrument to bolster international confidence on the strength and sustainability of their policy framework,” said IMF Managing Director Dominique Strauss-Kahn.

“Colombia has a sustained record of sound economic policies, and has very strong economic fundamentals and institutional and policy frameworks. The Colombian authorities’ have responded appropriately to the global financial crisis, and have demonstrated a commitment to maintaining this solid record. I therefore intend to move ahead rapidly in seeking approval by the Fund's Executive Board of Colombia's request for an FCL arrangement,” Strauss-Kahn stated.

The FCL is an instrument established in March that is available to IMF member countries deemed to possess very strong fundamentals, policies, and track records of policy implementation. Access to an FCL arrangement is based on the requesting country having met these criteria, rather than on fulfilling ex-post performance criteria.

Colombia’s GDP contracted in the fourth quarter of 2008 and economists say the country is probably in recession as investment stagnates, unemployment spikes and commodity export revenues dry up.

Industrial production plummeted 12.8% in February and retail sales fell 4.1% in the same month compared to February 2008, the government said on Monday.