The International Monetary Fund (IMF) reported this Friday that the agency approved a flexible credit line (LCF) for Chile worth 23.93 billion dollars over two years to face possible economic complications derived from the coronavirus health crisis. SARS-CoV-2.
The IMF executive board agreed to the request made on May 12 by the Central Bank of Chile to obtain this contingency resource.
This mechanism of the international economic organization offers the possibility of being used at any time during the established period.
In this sense, they informed through a statement that the amount is not conditioned neither to the fulfillment of previous goals or subsequent conditions in terms of economic policy, since LCFs are only granted to States with “very solid history”, which generates the confidence needed for approval.
“The very solid foundations of Chile, as well as its very solid institutional policy frameworks and the very good track record of implementing prudent macroeconomic policies have been essential to absorb the impact of a series of recent shocks,” said the managing director and president of the IMF Kristalina Georgieva at the end of the board meeting.
He also added that the Chilean authorities “continue to show a strong commitment to maintain very solid institutional policies and policy frameworks in the future.”
The head of the IMF noted that Chile “meets all the qualification criteria for an agreement under the LCF,” but that the open nature of its economy exposes it “to substantial external risks as a result of the COVID-19 outbreak.”
“Including a significant deterioration in global demand for Chilean exports, a sharp decline or reversal of capital inflows to emerging markets and an abrupt tightening of global financial conditions,” said Georgieva.
The Central Bank of Chile estimates that the Chilean GDP will contract up to 2.5% this year due to the influence of the coronavirus health crisis, although international organizations place the drop at around 4%.
The South American country registers 90,638 infected people and 944 deaths from COVID-19 disease.