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The Secretary of Finance and the Bank of Mexicoreported a few days ago that the International Monetary Fund (FMI), ratified that Mexico meets all the qualification criteria necessary to access, if required and without any condition, the resources of a Flexible Line of Credit (LCF) granted in 2021 for a period of two years. Which means that the government of the Fourth Transformation (4T) is carrying out an adequate economic policy with sound public finances.
The fact that the aztec country can have access to those IMF resources is a good news for the economy, since it gives confidence to both national and foreign investors and means insurance if an eventuality arises that put at risk the financial stability from Mexico.
The Flexible Credit Line, which is a revolving credit line, which can be signed at 1 or 2 years (If it is for two years, it requires a mid-term review), and that only countries that meet certain criteria of access have access. fiscal discipline y macroeconomic stability.
The executive board of the international organization decided to maintain for Mexico the amount of access equivalent to approximately 50 billion dollars that is, 35,650.8 million of Special drawing rights (DEG).
Just having access to the credit line of the international organization even without making the loan effective It has a cost “The recruitment fee is paid annually and is calculated as a percentage of the LCF. In the case of Mexico, the Flexible Credit Line that is currently contracted, and that represents the 500% of the quota of Mexico in the IMF, has a annual cost of 133.69 million SDR (about 200 million dollars a year)”.
The Flexible Credit Line was created by the IMF, the March 24, 2009 as part of a deep reform of the lending mechanisms of the financial institution, and this instrument is designed to lend money to countries that are going through a liquidity shortagewith the idea of adapting its lending tools to the diverse needs and circumstances of the member countries.
Countries qualified to receive loans from the IMF enjoy flexibility to use the revolving line of credit at any time within a predetermined period or to treat it as a precautionary instrumentin addition to the fact that these nations have broad and immediate access to the resources provided by the world Bank (BM) without continuous conditions.
The cost of borrowing for Mexico in the event that the country needs to access the Flexible Credit Line, It is low and the same as in the framework of the Stand-By Agreements traditional of the IMF and the Precautionary and Liquidity Line (LPL).
In June 2020, the World Bank granted a credit of billion dollars to the government of the Fourth Transformation for the economic recovery of the country in the face of the crisis caused by the expansion of the covid-19 pandemic.
The loan granted to Mexico by the World Bank was a Flexible Credit Line from the IMF to meet the demand for loans of prevention y mitigation from countries with very strong policy frameworks and economic histories.
Mexico is not the only country that has been granted a Flexible Credit Line, given the crisis caused by the Coronavirus pandemic; a Peru was granted a loan of this type by 11 billion dollars which is an amount higher by more than mil% to the granted to the aztec nation.
In conclusion, we can affirm that the Flexible Credit Line granted by the IMF and WB meets the demand for loans from prevention y crisis mitigation of countries with policy frameworks, and economic histories solid and the government of the Fourth Transformation is meeting those criteria imposed by international organizations, in addition to the responsible attitude of not borrow more to the country, as past federal administrations did.