On 14th November, the International Monetary Fund reported that its executive board had sanctioned a new two-year, $24 billion flexible credit line to Mexico, which the country could use as a precautionary measure against external risks, but that over the past years, the country has been gradually weaning itself off the precautionary fund.

The Mexican officials will consider the new arrangement precautionary and rescinded their earlier line of approximately $35 billion, the IMF announced in a statement.

This is the eleventh agreement of Mexico since 2009, and the amount of the credit line has been reduced to about $88 billion in 2017.

The IMF explained that the reduced figure is indicative of the augmented reserves and durability of the Mexican economy.

The government has good finances, which made it less susceptible to the sudden changes in capital flows, and so Mexican officials had demanded a new two-year credit line at a lower access level, according to a joint statement issued by the Bank of Mexico and the Mexican finance ministry.

But, IMF Deputy Managing Director Nigel Clarke said that the country is experiencing headwinds.

He said,”Though resilience in economic activity has been achieved in the country, there has been a need for fiscal consolidation and monetary policy that is still constraining, not to mention the dampening effect of trade tensions on the economy.” He said that trade-related risks had increased since the last FCL review.

The new credit line will still be significant to the macroeconomic strategy in Mexico and will be insurance against tail risks, as well as strengthening the market confidence, according to the fund.