The IMF approved a credit line for Mexico of $47 billion in the first use of a new instrument designed to bolster strong performing economies against fallout from the current global economic crisis.
The Mexican authorities have stated they intend to treat the one-year arrangement as precautionary and do not intend to draw on the line. The Executive Board approved the arrangement under the IMF’s new Flexible Credit Line (FCL), which was created in the context of a major overhaul of the Fund’s lending framework on March 24, 2009.
The FCL is particularly useful for crisis prevention purposes as it provides the flexibility to draw on the credit line at any time. Disbursements are not phased nor conditioned on compliance with policy targets as in traditional IMF-supported programs. This flexible access is justified by the very strong track records of countries that qualify for the FCL, which gives confidence that their economic policies will remain strong.Even if the Mexican government does not "intend" to draw on the credit line, the development is still really interesting. Word on the street is that Poland is next, with other developing-but-not-yet-developed countries mulling the possibility of asking the IMF for precautionary credit lines in the near future.