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Brazil & Southern Cone - May 2020

Economic Highlights

CHILE| Central bank approaches IMF. On 12 May, Chile’s central bank (BCCh) announced that it had approached the International Monetary Fund (IMF) for a US$23.8bn credit line. The BCCh explained that this credit line is of a precautionary nature, destined to complement its international reserves and increase immediate access liquidity availability by 60%. This would provide the BCCh with further means to face an eventual worsening of the economic crisis caused by the coronavirus (Covid-19) pandemic. IMF Managing Director Kristalina Georgieva has recommended that the organisation approve this Flexible Credit Line (FCL) arrangement, which it offers only to “countries with very strong policy frameworks and track records of economic performance”. Chile’s Finance Minister Ignacio Briones has clarified that the credit line is a request of the central bank to face external shocks, and not a loan requested by the government to fund public spending. He added that Georgieva’s recommendation is a vote of confidence in the robustness of Chile’s economy. This is the first time that the BCCh has requested this type of credit line from the IMF.    

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