The International Monetary Fund revealed that from now on the extension of the flexible credit line will depend on two aspects, which are the completion of the consultation of article IV and a subsequent intermediate review of the LCF. This announcement appears after an analysis by the international body.
The news was revealed by Julie Kozack, communications director of the International Monetary Fund (IMF). However, it was known that Colombia presented its intention to renew the credit line for one more year.
Regarding the end of the consultation of article IV, the IMF presented preliminary conclusions on April 18. In addition, after a visit that the IMF made to the country in the last months of this year, he mentioned that “the Liquidity restrictions contributed to an accumulation of large budget lags, 2.8 % of GDP ”.
It is worth mentioning that the Gross Domestic Product of 2024 reached an amount of 1,700 billion pesos. But this 2025 is being liquidated the accumulated backwardness, which is 48 billion pesos.
Additionally, these lags that are about to be settled “compete with the budget resources of 2025,” the agency warned
In that sense, after a first analysis of the country’s fiscal landscape, the IMF clarified that “Deficits and public debt have increased more than expected. The global fiscal deficit of the central government amounted to 6.7 % of GDP in 2024, compared to 4.2 % of GDP in 2023 and 1.1 percentage points of GDP above the deficit target of the authorities in the medium -term fiscal framework. ”
The IMF also indicated the intermediate review of the LCF will occur after the Agreement of the LCF, which was approved on April 26, 2024, for a period of two years. This happened after an intermediate review in that year to evaluate Colombia’s permanence in the LCF
Recall that the last approval of the extension occurred in April last year. At that time, the agency allowed a borrowing quota of 8,100 million dollars to Colombia.
However, this flexible credit line was first requested more than 10 years ago, as a strategy that would support the country and that would also have the mission of strengthening macroeconomic and financial stability at the time when high external volatility occurs.
The reaction of the former minister of Finance, Mauricio Cárdenas:
In this regard, the former Minister of Finance, Mauricio Cárdenas, indicated that this suspension can be classified as the “worst” message for financial markets.
“We run out of spare tire just when the world economy is full of uncertainties. The flexible credit line was the greatest sure Colombian economy. The reason for the IMF: the lack of a fiscal plan. The IMF is seeing the situation in Colombia very badly,” Cárdenas said.
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