IMF likely to expand credit line for Mexico

Mexico City, Dec 15 (IANS/EFE) The International Monetary Fund (IMF) is likely to approve Mexico’s request to increase to $73 billion the flexible credit line the institution created last year for Latin America’s No. 2 economy, IMF Managing Director Dominique Strauss-Kahn said here Tuesday.

The matter will be promptly taken up by the IMF executive committee, he said during a joint press conference with Mexican President Felipe Calderon and other top officials.

Mexico wants the IMF to replace the original one-year, $48 billion credit line with a two-year arrangement for $73 billion.

The IMF began offering the flexible credit lines to selected developing countries in March 2009 to cope with the effects of the severe global recession.

“While Mexico was significantly affected by the global financial crisis, the authorities responded resolutely and effectively, and a recovery is now underway,” Strauss-Kahn said Tuesday in the Mexican capital.

“Nonetheless,” he continued, “important uncertainties remain in the global environment, and I share the authorities’ view that the longer duration and higher access available under the reformed FCL can play an important role in continuing to support Mexico’s policy strategy and in maintaining external confidence.”

Making his first official visit to Mexico, Strauss-Kahn said the IMF is not imposing any conditions in exchange for the flexible credit line.

“We are just recognizing that Mexico is doing things right,” the IMF chief said.

Between the expanded credit line and Mexico’s current international reserves of roughly $111 billion, the country will have nearly $190 million to draw on in the event of financial turbulence.

The request for an enhanced IMF credit line is part of efforts to keep the Mexican economy of the path of recovery through 2012, the final year of his six-year term, Calderon said.

At the same time, he stressed that “Mexico does not contemplate using” the credit line, which he described as “financial insurance”.

Also present for the press conference was Mexican central bank governor Agustin Carstens, who said the IMF - where he once worked - has played a decisive role in reassuring international financial markets throughout the crisis.

He also pointed to forecasts that the Mexican economy will grow by 5 percent this year, following a 6.5 percent contraction in 2009.

–IANS/EFE