Peru approved a loan with the IMF to strengthen the economy in the face of global uncertainty

RIO DE JANEIRO, BRAZIL – The International Monetary Fund (IMF) approved a two-year agreement with Peru, under the framework of the flexible credit line for up to US$5.4 billion, to strengthen the resistance of the Peruvian economy in the face of global uncertainty, reported this Saturday the Central Reserve Bank.

The new agreement is for almost half the amount provided for in the one signed with the IMF in 2020, which Peru did not use, given that “the risks associated with the (covid-19) pandemic have been reduced” and the external position has been strengthened with the increase in international reserves with a balance of US$77 billion.

Read also: Check out our coverage on Peru

In the 2020 credit line, for US$11 billion, a contingent condition was applied, which would only be used if an external shock reduced the country’s international position, the issuing entity indicated.

The new flexible credit line was requested by the Peruvian authorities to “strengthen the resistance of the economy in the face of global uncertainty that still persists”, due to the pandemic and the war between Russia and Ukraine, as well as “more restrictive” international financial conditions, which affect economic activity and global inflation.

The central bank stressed that the agreement also has a contingent nature so that it can be used when it deems it necessary and that its sole approval “does not generate any additional debt.”

He added that the agreement “is not conditional on the achievement of economic goals” because it is aimed at countries with “very solid” macroeconomic fundamentals and with a long history of responsible economic policies. Mexico and Colombia currently have similar agreements in the Latin American region.