*The executive board of the International Monetary Fund (IMF) has approved a new two-year US$24bn flexible credit line (FCL) arrangement with Mexico. According to the IMF, the Mexican authorities intend to treat the new arrangement as precautionary and have cancelled their previous FCL arrangement of around US$35bn, which was approved in November 2023. The IMF stated that economic activity in Mexico remained “soft” and was “constrained by needed fiscal consolidation and still restrictive monetary policy, as well as the dampening effect of trade tensions”. However, the Fund noted that the economy had shown “resilience and stability in the face of heightened external uncertainty, owing in part to its very strong macroeconomic policies and institutional policy frameworks, including a flexible exchange rate regime, a credible inflation targeting framework, a fiscal responsibility law, and a well-regulated financial sector”. The IMF added that the new FCL arrangement will “continue to play an important role in supporting the authorities’ macroeconomic strategy and provide insurance against tail risks while bolstering market confidence”, while the lower level of access of the new arrangement “reflects the Mexican economy’s increased buffers and resilience”. This is Mexico’s 11th FCL arrangement since 2009. The credit line’s size has shrunk from a peak of around US$88bn in 2017.
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