IMF Approves $24 Billion Flexible Credit Line for Mexico
The Executive Board of the International Monetary Fund (IMF) has approved a new two-year successor arrangement for Mexico under the Flexible Credit Line (FCL), granting the country access to SDR 17.8254 billion, equivalent to approximately US$24 billion or 200 percent of quota.
The approval, granted on Thursday, follows a request by the Mexican authorities and coincides with the cancellation of the country’s previous FCL arrangement. Officials in Mexico have indicated their intention to continue treating the facility as precautionary, reinforcing its role as a buffer against elevated external risks.
This latest approval marks Mexico’s eleventh FCL arrangement since 2009. Over the past eight years, the country has consistently reduced its access levels under the facility. The initial arrangement approved in November 2017 provided access to SDR 62.389 billion (about US$88 billion), which Mexico requested to be trimmed to SDR 53.4762 billion (US$74 billion) in 2018.
Further reductions followed, with the November 2019 arrangement scaled back to SDR 44.5635 billion (US$61 billion), and subsequent successor arrangements in 2021 and 2023 lowering access to SDR 35.6508 billion (US$50 billion) and SDR 26.7381 billion (US$35 billion) respectively.
Commenting on the Board’s decision, IMF Deputy Managing Director and Acting Chair, Nigel Clarke, noted that although economic activity in Mexico remains subdued, the country has demonstrated resilience supported by strong macroeconomic policies and institutional frameworks.
“Economic activity in Mexico remains soft, constrained by needed fiscal consolidation and still restrictive monetary policy, as well as the dampening effect of trade tensions,” he said. “Nevertheless, the economy has shown resilience and stability in the face of heightened external uncertainty.”
He highlighted Mexico’s flexible exchange rate regime, credible inflation-targeting framework, fiscal responsibility law, and well-regulated financial sector as key anchors that underpin the country’s continued qualification for the FCL.
Mr Clarke further observed that the authorities had initiated “an appropriate recalibration of the policy mix”, easing monetary policy amid declining inflation pressures and reversing the 2024 fiscal expansion.
He urged additional fiscal consolidation measures to stem further increases in public debt while preserving fiscal space for future shocks. He added that further monetary easing could be considered once inflation shows clearer convergence toward the 3 percent target.
Looking ahead, Mr Clarke emphasised that long-term growth prospects would hinge on addressing infrastructure gaps, strengthening the rule of law, and deepening global trade integration.
The IMF noted that Mexico continues to face elevated external tail risks, particularly those stemming from rising trade-related tensions. However, the Fund also observed that global financial conditions have eased and Mexico’s external buffers have improved.
According to the IMF, the new FCL arrangement will support the authorities’ macroeconomic strategy, bolster market confidence, and provide insurance against unforeseen external shocks. The reduced access level, it added, reflects Mexico’s strengthened economic resilience.
The Mexican authorities reiterated their commitment to maintaining strong macroeconomic policies and confirmed their intention to treat the new FCL arrangement as precautionary.
