Colombia seeking large IMF loan, but no decision expected in coming weeks, sources say

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.