Peru has secured a two-year, $11 billion credit line from the IMF as the South American nation battles the growing impact of the coronavirus pandemic.
The Flexible Credit Line, which the IMF announced late Thursday, is a renewable funding mechanism granted to countries with strong economic policy track records, and Peru is only the fourth country to receive one, although Chile also has put in a request.IMF Managing Director Kristalina Georgieva praised Lima's "very strong policy and institutional frameworks" which, she said, "have helped it achieve impressive macroeconomic outcomes and reduce vulnerabilities."
However, "The COVID-19 shock poses an extraordinary challenge, which is pushing the Peruvian economy into a recession," she said in a statement. "The authorities have responded decisively by putting in place stringent containment measures and a large policy package to limit the socio-economic fallout."
She said the government intends to treat the credit line as "precautionary," and will consider exiting once the crisis has passed and "the insurance provided by an FCL arrangement would no longer be necessary."
The country has seen a surge in cases this week, with the death toll approaching 4,000.
The IMF has ramped up lending and rolled out a series of new financing tools to help countries deal with the pandemic, which is expected to cause the worst global economic slowdown since the Great Depression.