• The approval had been expected since IMF Managing Director Kristalina Georgieva backed the plan earlier this month due to Chile's “very strong fundamentals" and track record
  • Georgieva said that Chilean authorities intended to use the credit line as precautionary and temporary financing, with plans to exit the arrangement in two years.

WASHINGTON: The International Monetary Fund said late on Friday its executive board approved a $23.9 billion flexible credit line to bolster the commodity exporter's finances as it a battles the coronavirus pandemic and deals with a severe drop in demand.

The approval had been expected since IMF Managing Director Kristalina Georgieva backed the plan earlier this month due to Chile's “very strong fundamentals" and track record

In a statement, Georgieva said that Chilean authorities intended to use the credit line as precautionary and temporary financing, with plans to exit the arrangement in two years.

“Notwithstanding its very strong fundamentals and policy settings, Chile's open economy is exposed to substantial external risks as a result of the ongoing COVID-19 outbreak, including a significant deterioration in global demand for Chilean exports, a sharp decline or reversal of capital inflows toward emerging markets, and an abrupt tightening of global financial conditions," Georgieva said.

Chile will have the ability to draw on the credit line, designed for crisis prevention, at any time during the next two years without having to meet policy targets required in traditional IMF-supported programs, the Fund said.