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

The IMF completed its standard mid-term review of Mexico’s qualification under the Flexible Credit Line (FCL), which was originally approved on November 19, 2021, with an access level of about US$50 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.

In view of rising external risks since the beginning of the arrangement, the Mexican authorities have elected not to request a reduction in access during this review but remain committed to pursuing a gradual path to exit, conditional on the evolution of external risks. The authorities intend to continue to treat the arrangement as precautionary.

Washington, DC: On November 16, 2022, 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 35.6508 billion (400 percent of quota, about US$50 billion)¹ was approved by the IMF’s Executive Board on November 19, 2021 (see Press Release No. 21/340 ). The Mexican authorities stated their intention to treat the arrangement as precautionary.

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

“Mexico’s recovery from the pandemic is underway, but a more turbulent external environment, a surge in global inflation and tighter global financial conditions, and slowing U.S. economic activity present new challenges and risks to the recovery. 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. The global surge in inflation has touched off a round of monetary tightening and rising global risk aversion and threatened growth. Elevated risks from an advanced economy slowdown, disorderly global financial market tightening, Russia’s invasion of Ukraine, slowdown in China, and changes in commodity prices continue to cloud the outlook. 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. Owing to heightened external risks, they have decided to maintain their current access levels, but nevertheless reaffirmed their commitment to pursuing a gradual path to exit, conditional on the evolution of external risks. The authorities intend to continue to treat the arrangement as precautionary.”

Public Release. More on this here.