IMF signals intent to approve $11 billion credit line for Peru
May 11, 2020 |
Managing Director says will recommend Flexible Credit Line for world No. 2 copper producer
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The International Monetary Fund, late on Friday, said it plans to approve Peru’s request for access to a two year flexible line of credit of up to $11 billion to help fund its response to the coronavirus pandemic.
“IMF Managing Director Kristalina Georgieva intends to recommend IMF Executive Board approval of the FCL arrangement request when the Board convenes in the coming weeks to formally consider the request,” the IMF said in a statement.
The decision, made during an informal session of the IMF’s Executive Board, would give the money under the institution’s Flexible Credit Line facility. The IMF says this kind of credit facility is available to countries like Peru which demonstrate very strong policy frameworks and track record. The credit line is being treated as precautionary financing by Peru.
A massive stimulus program, worth 12% of gross domestic product was unveiled by Peru last month.
The nation’s The Ministry of Economy and Finance, or MEF, received permission to sell up to $4 billion in cross-border bonds, according to an emergency decree issued on April 30, less than a month after the government raised $3 billion through a two-part deal with $1 billion in five-year notes and $2 billion in 10-year notes.
Following the record-breaking debt offering in mid-April, which garnered more than $25 billion in orders, Peru had raised $13 billion, or more than 6% of GDP, for its response to COVID-19, according to José Olivares, head of the treasury department at MEF.
GDP in Peru is expected to fall around 3% this year as mining exports, construction and tourism take an especially hard hit from the coronavirus. For the next three years, however, Peru's economy will likely grow an average of 4% per year, S&P Global said in a recent research report.