Nov 14 (Reuters) – The International Monetary Fund on Friday said its executive board had approved a new two-year, $24 billion flexible credit line for Mexico to act as a buffer against external risks, noting the country has steadily reduced its reliance on the precautionary fund in recent years.<\/p>\n
The Mexican authorities intend to treat the new arrangement as precautionary and canceled their previous line of about $35 billion, the IMF said in a statement.<\/p>\n
Sign up here.<\/a><\/p>\n This marks Mexico’s eleventh such arrangement since 2009, with the credit line’s size shrinking from a peak of around $88 billion in 2017.<\/p>\n The IMF said the lower amount “reflects the Mexican economy’s increased buffers and resilience.”<\/p>\n Mexican officials had requested a new credit line for another two years at a lower access level, citing the government’s strong finances that make it less vulnerable to sudden shifts in capital flows, the Bank of Mexico and Mexico’s finance ministry said in a joint statement.<\/p>\n However, IMF Deputy Managing Director Nigel Clarke noted the country’s economy faces headwinds.<\/p>\n “Economic activity in Mexico remains soft, constrained by needed fiscal consolidation and still restrictive monetary policy, as well as the dampening effect of trade tensions,” he said.<\/p>\n He added that while the country has shown resilience, “trade-related risks have risen since the last FCL review.”<\/p>\n The new credit line will continue to play an important role in supporting Mexico’s macroeconomic strategy and provide “insurance against tail risks while bolstering market confidence,” according to the fund.<\/p>\n Reporting by Chris Thomas and Kylie Madry in Mexico City; Editing by Leslie Adler and Brendan O’Boyle<\/p>\n Our Standards: The Thomson Reuters Trust Principles., opens new tab<\/a><\/p>\n