Press Release No. 19/180

IMF Executive Board Completes Review of Colombia's Performance under the Flexible Credit Line Arrangement

May 22, 2019

On May 20, 2019, the Executive Board of the International Monetary Fund (IMF) completed its review of Colombia’s qualification for the arrangement under the Flexible Credit Line (FCL) and reaffirmed Colombia’s continued qualification to access FCL resources. The Colombian authorities stated their intention to continue treating the arrangement as precautionary. The current two-year FCL arrangement for Colombia in an amount equivalent to SDR 7.848 billion (about US$11 billion) was approved by the IMF’s Executive Board on May 25, 2018 (see Press Release No. 18/196).

Colombia’s FCL arrangement was first approved on May 11, 2009 (see Press Release No. 09/161) and successor arrangements were approved on May 7, 2010 (see Press Release No. 10/186), May 6, 2011 (see Press Release No. 11/165), June 24, 2013 (see Press Release No. 13/229), June 17, 2015 (see Press Release 15/281) and June 15, 2016 (see Press Release No. 16/279).

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

“Colombia’s economic recovery is gaining momentum, supported by its very strong policy frameworks and well-executed policies. Fiscal policy remains anchored over the medium term by the structural deficit rule and monetary policy is governed by a credible inflation targeting framework that has delivered inflation close to target and anchored inflation expectations. The financial system remains sound and financial sector supervision is being further strengthened, including through a gradual convergence to Basel III standards. A flexible exchange rate continues to be the primary mechanism of adjustment to external shocks.

“With elevated downside risks to global growth, Colombia remains exposed to the materialization of external tail risks. Given the importance of the oil sector for the Colombian economy and the relatively high share of non-resident holdings of domestic government bonds, these risks include a sharp correction in the price of oil or a repricing of risk in global financial markets. In that context, the authorities are further strengthening their policy frameworks and building policy space to ensure Colombia’s continued resilience to external shocks, including through a well-communicated program to gradually accumulate international reserves.

“The FCL arrangement continues to provide a cushion of international liquidity and signals the strength of Colombia’s economy and its policy frameworks. The authorities have clearly stated their intention to continue to treat the FCL arrangement as precautionary and have taken proactive steps to prepare for a gradual phasing out, risks permitting, of the FCL in line with the temporary nature of the instrument. A careful communication strategy remains important to facilitate a smooth exit from the FCL.”