IMF precautionary facilities and their use in Latin America

Between 2009 and 2010, in response to the global financial crisis, the International Monetary Fund created a number of lending tools to pre-empt and insure against crises. These pre-emptive facilities were intended for countries with sound economic fundamentals and policies, but with exposure to financial contagion risks. The use of these instruments (in terms of number of countries) was limited during the first ten years of their existence, but with the outbreak of the pandemic three Latin American countries applied to use them. An assessment of these lines suggests they have performed the insurance function for which they were conceived. In anticipation of the forthcoming review of these credit lines, and in the light of recent experience, possible reasons for the limited demand are analysed and relevant factors are suggested for the design of “exit strategies”, the aspect of their use that has attracted most attention.