Press Release No. 17/189

IMF Executive Board Completes Review of Mexico’s Performance under the Flexible Credit Line Arrangement

May 22, 2017

• IMF Board reaffirms Mexico’s continued qualification to access US$ 86 bln Flexible Credit Line
• Mexico’s economy has shown resilience to bouts of volatility reflecting country’s very strong policies and policy frameworks
• Mexico continues to face elevated external risks related to uncertainty about the future of bilateral relations with U.S.

On May 22, 2017, the Executive Board of the International Monetary Fund (IMF) completed its review of Mexico’s qualification for the arrangement under the Flexible Credit Line (FCL) and reaffirmed Mexico’s continued qualification to access FCL resources. The Mexican authorities stated their intention to continue treating the arrangement as precautionary. 

The two-year FCL arrangement for Mexico in an amount equivalent to SDR 62.389 billion (about US$86 billion^[1]) was approved by the IMF’s Executive Board on May 27, 2016 (see Press Release No. 16/250). Mexico’s first FCL arrangement was approved on April 17, 2009 (see Press Release No. 09/130), and was renewed on March 25, 2010 (see Press Release No. 10/114), January 10, 2011 (see Press Release No. 11/4), November 30, 2012 (see Press Release No. 12/465), and November 26, 2014 (see Press Release No. 14/543). 

Following the Executive Board discussion on Mexico, Mr. David Lipton, First Deputy Managing Director and Acting Chairman of the Board, made the following statement: 

“Mexico’s economy has shown resilience to bouts of financial market volatility since the approval of the Flexible Credit Line arrangement. The country continues to face elevated external risks related to uncertainty about the future of bilateral relations with the United States, particularly on trade. Despite this uncertainty, moderate growth continues and foreign exchange and sovereign debt markets have continued to function well. While temporary factors have pushed inflation above target, medium-term inflation expectations remain well anchored. 

This resilience reflects the country’s very strong policies and policy frameworks, with the exchange rate playing a key role as a shock absorber. Looking ahead, the authorities have reaffirmed their commitment to implement their fiscal consolidation plan, which should put the public debt-to-GDP ratio on a downward trajectory; anchor inflation expectations; gradually rebuild foreign exchange reserves; and maintain strong oversight of the financial system. In addition, the implementation of a broad range of structural reforms is expected to raise medium-term growth. 

The Flexible Credit Line arrangement, for which Mexico continues to meet the qualification criteria, will play an important role in supporting the authorities’ macroeconomic strategy by providing additional insurance against tail risks and bolstering market confidence. The authorities continue to treat the arrangement as precautionary, and have stated their intention to reduce access in any possible request of subsequent FCL arrangements, conditional on a reduction of the external risks affecting Mexico.”

[1] Amount based on the Special Drawing Right (SDR) quote of May 22, 2017 of
I USD= SDR 0.722952