Mexico’s economic performance justified IMF credit line

Never-used $73 Billion loan is showing why the country is safer to bond traders

Washington.-The International Monetary Fund justified its decision to extend Mexico's $73 billion credit line for another two years, citing its solid economic fundamentals and sound policy management and persistent global risks.

The IMF approved the extension of Mexico's Flexible Credit Line and issued a complete staff report on the arrangement on Friday.

"Mexico's strong economic performance attests to its strong fundamentals and sound policy management. The strength and resilience of the recovery after the global crisis have been underpinned by Mexico's sound balance sheets, strong policy frameworks, and skillful macroeconomic management," the report said.

The credit line was scheduled to expire in January 2013.

The FCL is an instrument that enables developing countries with stable public finances to request IMF assistance before they face a potential financial crisis or significant future external pressures, although the funds are preventative in nature and intended for use only in an emergency.

The IMF justified the extension by noting that "since the approval of the current FCL, global conditions have remained highly unsettled, particularly with respect to potential downside risks that could trigger a surge in global risk aversion and generalized financial contagion."


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