IMF approves new $13.8b flexible credit line for Chile

The International Monetary Fund (IMF) has approved a new two-year Flexible Credit Line (FCL) arrangement for Chile, amounting to approximately $13.8 billion. This arrangement, which represents 600 per cent of Chile’s quota, follows the cancellation of the country’s previous FCL arrangement.

The Chilean authorities intend to treat this new agreement as precautionary and plan to reduce access gradually, depending on external risk developments.

This marks Chile’s third FCL arrangement since 2020, with the previous agreements approved in May 2020 and August 2022. The IMF noted Chile’s strong economic fundamentals and institutional policy frameworks as key factors in its qualification for the FCL.

“The near-term outlook has improved, supported by a pickup in mining exports and a recovery in consumption,” stated Bo Li, IMF Deputy Managing Director. However, he cautioned that Chile remains vulnerable to external risks, including potentially prolonged interest rate hikes in the US, a slowdown in China, and regional conflicts.

Li emphasised that the Chilean government continues to implement robust policies to address macroeconomic imbalances and advance reforms aimed at boosting economic dynamism while promoting inclusivity and sustainability. “The Flexible Credit Line arrangement will continue to provide a valuable buffer against tail risks and a signal of Chile’s policy and institutional strengths,” he added.

Attribution: IMF statement

Subediting: M. S. Salama