WASHINGTON, June 24 (Reuters) - The International Monetary Fund said on Monday it had approved a new two-year $5.84 billion flexible credit line for Colombia as a precautionary buffer against potential risks from the global economy.
The new credit line will replace a previous $6 billion two-year program, which recently expired.
Colombia requested the new credit line and has previously said it only intended to treat the facility as precautionary and did not intend to draw on it.
According to the IMF, the flexible credit line is available to countries with very strong fundamentals, policies, and track records of policy implementation and is particularly useful for crisis prevention purposes.
While lauding Colombia's policy framework, which includes inflation targeting, a flexible exchange rate and effective financial sector supervision, the IMF noted the economy remained vulnerable to global economic developments.
"However, risks to the global economic outlook remain elevated, and if they materialized, they would affect Colombia's economy and external accounts," said David Lipton, IMF first deputy managing director and acting chairman of the board.
He said the credit line would help Colombia manage any potential shocks and sustain strong economic performance, while continuing to strengthen its policy framework and rebuilding policy buffers.
The flexible credit line was established in 2009 and enhanced in 2010. If a country draws on the facility, it must repay within three and five years.