LatinNews Daily - 23 May 2022

In brief: Chile receives IMF’s first SLL

*Chile’s government has accepted an offer of a Short-term Liquidity Line (SLL) arrangement from the International Monetary Fund (IMF) amounting to around US$3.5bn – the maximum amount under this arrangement. In a statement, the Fund says the SLL will support Chile’s economic resilience by providing a backstop for potential, moderate, short-term liquidity needs. This is the first SLL agreement the fund has ever approved, after creating the facility in April 2020. The IMF describes the SLL as “a revolving and renewable backstop for members with very strong fundamentals and policy track records”. It allows recipients to draw from the liquidity line at any time that balance of payment needs arise, with disbursements not phased or tied to compliance with policy targets as in regular IMF-supported programmes. The IMF states it believes Chile will “successfully transition” to the SLL given its “well-entrenched” recovery from the coronavirus (Covid-19) pandemic, recalibration of macroeconomic policies and “comfortable liquidity buffers” that authorities have developed.

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