The International Monetary Fund (IMF) approved a two-year flexible credit facility agreement for Chile worth US$18.5 billion, aimed at increasing the country’s reserves and providing insurance against adverse scenarios.
In a statement, the institution said that the line will be treated as a precaution, and that the Chilean economy faces a sharp increase in global risks.
“Chile qualifies for the line by virtue of its very strong economic fundamentals and policies, which continue to support the country’s resilience and ability to respond to shocks,” said the IMF, which assessed that the country had “an impressive recovery.” consequences of the Covid-19 pandemic”.
The line will temporarily increase Chile’s precautionary reserves and provide insurance against a wide range of risks, “including a possible abrupt global slowdown; commodity price shocks; repercussions of Russia’s war in Ukraine; or a sharp tightening of financial conditions,” says the IMF.
The program allows its beneficiaries to use the line of credit at any time and is designed to flexibly meet the actual and potential needs of the balance of payments.
Withdrawals are not tied to conditionalities, as in regular IMF-supported programs.
In a report, Capital Economics points out that countries with large current account deficits, notably Chile, are finding their currencies under pressure, prompting aggressive monetary policy responses.
In July, the country’s central bank raised interest rates to 9.75%, the highest level in 24 years.
Source: CNN Brasil