Peru has informed the International Monetary Fund (IMF) of its decision to let the current flexible credit line (FCL) arrangement expire on May 26, 2024, without seeking a successor. This decision aligns with Peru’s previous intention to exit the FCL arrangement, contingent on the evolution of external risks.
Initial and successor arrangements
The IMF’s executive board approved Peru’s initial FCL arrangement in May 2020, during the early stages of the global COVID-19 pandemic. The arrangement, set at 600 percent of Peru’s quota, aimed to provide strong signaling, additional buffers, and insurance against external shocks amidst rising global risks. In May 2022, Peru reduced its access to 300 percent of the quota in a successor arrangement. This came after the country improved its international reserves and decreased its external financing needs.
Throughout both arrangements, Peru has treated the FCL as precautionary. The country maintained robust foreign exchange reserves, low public debt and a prudent fiscal position. In May 2023, Peruvian authorities reiterated their intention to exit the arrangement, conditional on external risk conditions.
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Strong economic fundamentals
The IMF’s executive board commended Peru for its very strong economic fundamentals and institutional policy frameworks. Despite political turmoil, Peru has maintained a constant track record of implementing robust macroeconomic policies. The IMF noted that Peru’s commitment to maintaining strong institutions and policies would further enhance its resilience against external risks.
Peru has been a member of the IMF since 1945 and holds a quota of SDR 1,334.5 million (approximately $1,761 million). Over the past years, the country has demonstrated resilience and strong economic management. Therefore, it positions itself well to manage external shocks independently as it exits the FCL arrangement.
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