February 4, 2023

East Valley Times

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IMF approves $18.5 billion unconditional credit line for Chile

A person walks past the IMF logo at the 2018 annual meeting of the International Monetary Fund and World Bank in Nusa Dua, Bali, Indonesia (REUTERS/Johannes P. Christo/File)

The International Monetary Fund (IMF) on Monday approved a two-year flexible credit line (FCL) for Chile worth $18.5 billion.As a preventive measure to insure the country against adverse situations, the financial institution said.

In May of this year, Chile decided to abandon the LCF – a type of preventive loan designed to respond to exceptional economic circumstances – that it had contracted with the IMF in 2020, when the Covid-19 pandemic was announced.

However, later The country again sought access to this loanThe board of directors of the fund approved this Monday and which Equal to 800% of Chile’s allocation to the IMF.

Explained in a virtual press conference by the Fund’s head of mission for Chile, Ana CorpachoThe request to return to LCF came from Central Bank of Chile And Treasury of that country.

Gabriel Boric (REUTERS/Ailén Díaz/Archivo)
Gabriel Boric (REUTERS/Ailén Díaz/Archivo)

Corpacho highlighted that the fund considers Chile’s economy resilient and “very well managed,” but that it faces a significant increase in global risks and potential external shocks..

Chile meets requirements to access LCF”Better certainty of its fundamentals and economic principles”, which continues to underline the country’s resilience and ability to respond to shocks.

The FCL could be used to meet balance of payment requirements, which is why the Chilean authorities informed the IMF. A decision to repeal the existing short-term liquidity tax (LLCP) of $3,300 million.

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The FCL allows beneficiary countries to draw on the line of credit at any time and in any amount, and is designed to meet actual and potential payment needs.

Among the possible external risks facing the Chilean economy, the IMF highlighted a sharp slowdown in the world economy, shocks in the prices of raw materials, the consequences of Russia’s war in Ukraine or the continued tightening of international financial conditions.

(with information from EFE)

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