Peru, Second Country to Leave IMF Credit Program

0
8

Peru will become the second country to exit an IMF aid program later this month, the Washington-based lender said Tuesday, citing “strong economic fundamentals.

The South American country will exit its Flexible Credit Line (FCL) when it expires on Sunday, the International Monetary Fund (IMF) said in a statement. This makes Peru the second country to leave the program after Poland first left in 2017.

The International Monetary Fund (IMF) established the FCL in 2009 to provide financial support to developing countries with strong macroeconomic fundamentals, helping them meet balance of payments needs during times of crisis and increasing market confidence.

Peru entered the IMF’s FCL program at the start of the COVID-19 pandemic in May 2020, opening an unused emergency credit line of around $10 billion that was later halved.

“The IMF Executive Board commended the authorities for their very strong economic fundamentals and institutional policy framework, continued track record of implementing very strong macroeconomic policies despite political turmoil,” the IMF said in a statement.

In an updated economic forecast, the IMF said it now expects Peru’s economy to recover from last year’s twin challenges of “climate-related shocks and social unrest” and grow by 2.5 percent this year.

This growth will be “supported by a strong recovery in the agriculture and fisheries sectors, continued momentum in the mining sector, and a looser monetary policy stance,” he continued, adding that inflation is also expected to decline.