Press Release No. 20/348

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

November 20, 2020

• The IMF completed its standard mid-term review of Mexico’s qualification under the Flexible Credit Line (FCL), which was originally approved on November 22, 2019 with an access level of about US$61 billion.
• Mexico continues to qualify for the FCL by virtue of its very strong fundamentals and institutional policy frameworks and track record of economic performance and policy implementation.
• The arrangement has bolstered confidence through the ongoing global pandemic and, combined with the comfortable level of international reserves and access to bilateral swap facilities, provides insurance against downside risks. The authorities intend to continue to treat the arrangement as precautionary.

Washington, DC: On November 18, 2020, 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 affirmed Mexico’s continued qualification to access FCL resources. The current two-year FCL arrangement for Mexico in an amount equivalent to SDR 44.5635 billion (about US$61 billion) was approved by the IMF’s Executive Board on November 22, 2019 (see Press Release No. 19/431 ). The Mexican authorities stated their intention to treat the arrangement as precautionary.

Following the Executive Board’s discussion on Mexico, Mr. Geoffrey Okamoto, First Deputy Managing Director and Acting Chair, made the following statement:

“Mexico has been buffeted by an extraordinary confluence of shocks from the COVID-19 pandemic, with a heavy toll on the Mexican people. The economy has nonetheless demonstrated resilience owing to its very strong policies and institutional policy frameworks, including a flexible exchange rate regime, a credible inflation targeting framework, a fiscal responsibility law, and a well-regulated financial sector.

“The Mexican economy remains exposed to external risks, including a global resurgence of the outbreak which could result in diminished external demand, a delay in the recovery of tourism, and a fall in oil prices. International tensions over health supplies, premature withdrawal of policy support in advanced economies, and lingering trade disputes could further disrupt market sentiment. The Flexible Credit Line (FCL) will continue to play an important role in supporting the authorities’ macroeconomic strategy by providing insurance against tail risks and bolstering market confidence.

“The authorities have a track record of sound policy management and are firmly committed to maintaining prudent policies going forward. They intend to continue to treat the arrangement as precautionary. Owing to the heightened external risks associated with the pandemic, the authorities have paused their planned path of reductions in access levels. They have affirmed their intention not to make permanent use of the FCL and, as external risks facing Mexico recede, to resume their planned path to exit from the facility.”