Multilateral organization highlighted solid fundamentals of the Peruvian economy
The International Monetary Fund (IMF) renewed a two-year flexible line of credit for Peru for 5.4 billion dollars and hopes that the Peruvian authorities once again plan to treat it as a precautionary instrument.
“Despite a strong recovery in 2021, Peru’s economy remains exposed to elevated risks, such as further waves of the covid-19 pandemic, the war in Ukraine, a tightening of global financial conditions, and political uncertainty,” he said. multilateral organization in a statement.
The IMF explained that this Flexible Credit Line (FCL), designed for crisis prevention, will act as an insurance against these risks and will reinforce market confidence. “The authorities intend to treat the deal as precautionary and exit the deal when external conditions allow,” said IMF Deputy Managing Director Kenji Okamura.
solid fundamentals
The official highlighted that Peru canceled the previous FCL approved in May 2020 for 11,000 million dollars and the lower amount requested now is a reflection of the very solid fundamentals of the country.
The IMF created the FCL in 2009 to meet the demand for crisis prevention and mitigation loans from countries with very strong economic policy frameworks.
The agreement works as a renewable line of credit, subject to review if it is for two years and not conditional on the fulfillment of economic policy goals, as occurs with the Fund’s traditional programs.
The IMF reported in early May that it expects Peru’s growth to slow to 3% in 2022. Peru’s gross domestic product (GDP) expanded 13.3% in 2021, after an 11% contraction the previous year caused by the pandemic .