Nov 9 (Reuters) – Colombia is seeking a large lending arrangement with the International Monetary Fund, but no decision is expected in coming weeks, sources familiar with the talks said on Monday.
Bloomberg reported earlier that the Andean country was negotiating for a $15 billion stand-by arrangement with the IMF.
The IMF had no immediate comment on the report.
One of the sources reached by Reuters said the amount could be somewhat lower than $15 billion, adding that no decision had been made. A second source said the discussions were ongoing, with no immediate agreement in sight.
Reuters reported early last month that Colombia could seek between $8 billion and $20 billion in assistance.
Current and former officials noted at the time that the IMF instrument best suited to Colombia’s circumstances would be the Precautionary and Liquidity Line, a facility designed for countries with sound economic fundamentals and institutional frameworks but that face vulnerabilities.
Colombia’s government has projected a fiscal deficit of 7.2% of its gross domestic product this year and a record 9.4% of GDP next year. It has Special Drawing Rights equivalent to roughly $2.78 billion, allowing it to access about $16.6 billion over the lifetime of the SDR agreement.
An IMF official subsequently said Colombia urgently needed to start a fiscal consolidation, noting that the IMF was working closely with Colombian officials.
While the nation meets most of the criteria for a PLL, including a sound financial system, strong monetary policy framework and central bank independence, it would need to demonstrate progress on the fiscal sustainability of its debt to qualify. Repeated budget overruns have eroded confidence in its policy framework.
(Reporting by Andrea Shalal in Washington and Rodrigo Ramirez in Mexico City; Editing by Stephen Coates)
