Political Risk Latin America Blog @PolRiskLatam

Mexico ups its insurance cover

Posted in News and Articles, Political Risk by politicalrisklatam on January 11, 2011

by Stefan Wagstyl for Financial Times – Beyond Brics, January 11th 2011.

Given that it is better to borrow when credit is on offer, Mexico has been wise to boost its precautionary International Monetary Fund facility even though it has no particular need for money.

The increase, approved by the Fund late on Monday, will see Mexico’s precautionary credit line soar from $47bn to a whopping $72 billion, the largest IMF facility ever. Given that Mexico is not in financial trouble, it speaks volumes for the fragility of the global economy that it wants this deal – and that the IMF has agreed.

Mexico, which is renewing a facility that expires in April, took advantage of new rules for the credit-line programme to support countries before crises develop.

The IMF’s first deputy managing director John Lipsky said in a statement:

Since mid-2009, Mexico has been experiencing a robust cyclical recovery. …However, important risks to the global economic outlook remain, particularly from pressures on global investor confidence and capital flows, which pose continuing challenges for emerging markets like Mexico. (continue reading… )

 

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