Press Release No. 23/126

IMF Executive Board Concludes Review of Colombia’s Performance Under the Flexible Credit Line Arrangement

April 27, 2023

Washington, DC: The Executive Board of the International Monetary Fund (IMF) concluded on April 26, 2023, 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 current two-year FCL arrangement for Colombia was approved by the IMF’s Executive Board on April 29, 2022 (see Press Release No. 22/135) in an amount equivalent to SDR 7.1557 billion (about US$9.8 billion). The Colombian authorities stated their intention to continue treating the FCL arrangement as precautionary.

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 ), June 15, 2016 (see Press Release No. 16/279 ), May 25, 2018 ( see Press Release No. 18/196 ), and May 1, 2020 (see Press Release No. 20/201 ), which was later augmented on September 25, 2020 (see Press Release No. 20/300 ) due to the pandemic. Colombia made a drawing of SDR3.75 billion or about US$5.4 billion in December 2020 ( see Press Release No. 20/363 ).

Following the Executive Board’s discussion on Colombia, Ms. Antoinette Sayeh, Deputy Managing Director and Acting Chair, made the following statement:

“Colombia has very strong economic fundamentals and policy frameworks anchored by a credible inflation targeting-regime, a solid medium-term fiscal framework, a flexible exchange rate, and effective financial sector supervision and regulation. The authorities remain firmly committed to sustain their track record of implementing very strong policies and maintain such policies in the future.

“External risks remain elevated and tilted to the downside. Global financial conditions could become more disorderly with negative effects on commodity prices and growth. An escalation of Russia’s war in Ukraine could disrupt trade and financial flows. Contagion from the international banking sector turmoil could adversely impact economic and financial stability, although continued strong oversight will likely temper these effects. Domestically, special care will be needed to prudently design and communicate on structural reforms. The Flexible Credit Line (FCL) has helped strengthen Colombia’s resilience to external shocks and signaled the quality of Colombia’s macroeconomic policies and institutional frameworks.

“Following a robust recovery from the pandemic, the Colombian economy is undergoing the necessary transition towards a more sustainable growth path. Macroeconomic policies are being appropriately tightened and should remain tight to durably reduce inflation, strengthen public finances, and address external imbalances. While the objectives of the structural reform agenda to enhance equality, promote economic diversification, and strengthen governance are commendable, a careful and prudent implementation will be essential to preserve fiscal and financial stability, and ensure that economic incentives are well aligned.

“The arrangement under the Flexible Credit Line has and will continue to reinforce market confidence and provide added insurance against external risks. The authorities intend to continue to treat this arrangement as precautionary and to gradually reduce access towards an eventual exit, conditional on a reduction of external tail risks. Continued reserve accumulation, as conditions allow, would further strengthen resilience.”