IMF precautionary facilities and their use in Latin America

Sonsoles Gallego, Isabel Garrido and Ignacio Hernando
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Sonsoles Gallego: Banco de España
Isabel Garrido: Banco de España
Ignacio Hernando: Banco de España

No 2224, Occasional Papers from Banco de España

Abstract: Between 2009 and 2010, in response to the global financial crisis, the International Monetary Fund created a number of lending tools to pre-empt and insure against crises. These pre-emptive facilities were intended for countries with sound economic fundamentals and policies, but with exposure to financial contagion risks. The use of these instruments (in terms of number of countries) was limited during the first ten years of their existence, but with the outbreak of the pandemic three Latin American countries applied to use them. An assessment of these lines suggests they have performed the insurance function for which they were conceived. In anticipation of the forthcoming review of these credit lines, and in the light of recent experience, possible reasons for the limited demand are analysed and relevant factors are suggested for the design of “exit strategies”, the aspect of their use that has attracted most attention.

Keywords: IMF; insurance facilities; Flexible Credit Line; Short-term Liquidity Line; Latin America (search for similar items in EconPapers)
JEL-codes: F30 F33 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2023-02
New Economics Papers: this item is included in nep-lam, nep-mac and nep-mon
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https://www.bde.es/f/webbde/SES/Secciones/Publicac ... 22/Files/do2224e.pdf First version, February 2023 (application/pdf)
https://www.bde.es/f/webbde/SES/Secciones/Publicac ... s/22/Fich/do2224.pdf Spanish version (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:bde:opaper:2224e

DOI: 10.53479/29609

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