(Bloomberg) — Mexico and the International Monetary Fund are discussing a plan to reduce the nation’s $63 billion precautionary credit line by 20% when it comes due for renewal next month, after economic risks from the global pandemic subsided.
The IMF and the Mexican authorities last week talked about the proposal to cut access to $50 billion, according to three people familiar with the discussions, who asked not to be named because the conversation was private.
The talks came as part of the visit to Washington last week by central bank Governor Alejandro Diaz de Leon and Finance Minister Rogelio Ramirez de la O. The pair met with IMF officials including Managing Director Kristalina Georgieva last Wednesday during IMF and World Bank annual meetings.
The plan calls for lowering Mexico’s access to the line to 400% of the nation’s quota, or its share in the IMF, from the current 500%, the people said. Two of the people said Mexico intends to further reduce the credit line next year. The plan isn’t final and still requires approval from the IMF board, they said.
The IMF intends for country credit lines to be phased out over time, and the reduction is part of plans to do so for Mexico. The nation had been due to make the cut last November, but instead at that time won approval from the IMF to maintain the line at its current $63 billion based on risks from Covid-19.
Reducing the credit line would cut the annual fee Mexico pays for access by almost $40 million, to $130 million.
Mexico also is benefiting from $12.2 billion in reserve assets, known as special drawing rights, that the nation’s central bank received in August as part of a global allocation of $650 billion.