IMF Gives Nod to US$10 Billion Loans for Coronavirus Crisis; Small-Medium Businesses Get Payroll Help

The International Monetary Fund (IMF) announced April 9 that its executive board will recommend approval of a US$10.8 billion line-of-credit request to help Colombian businesses and workers weather the economic downturn caused by the Coronavirus crisis.

“This renewable credit line helps safeguard against external shocks by providing countries who have very strong policy frameworks and track records of economic performance with large, upfront access to IMF resources — with no ongoing conditions,” according to IMF.

“Given Colombia’s very strong policy frameworks and track record, IMF managing director Kristalina Georgieva intends to recommend approval of the 2020 flexible credit line [FCL] arrangement for Colombia when the IMF executive board meets again to take a decision in the following weeks,” according to the organization.

In addition to the Colombian Treasury Ministry’s new expansion of finance totaling COP$12 trillion (US$3.3 billion) to micro-, small- and medium-sized enterprises through the “Fondo Nacional de Garantias” (FNG, National Guarantee Fund), Colombia President Ivan Duque announced April 9 further aid to help small/medium businesses meet payroll.

Government loan guarantees for MSMEs will increase to 80%, up from a prior range of 60% to 70%, Duque announced.

In addition, under the new aid program, the Colombian government will “finance for three months those payrolls of micro-, small and medium enterprises [MSMEs], especially covering people earning up to five monthly [minimum] salaries [COP$4.9 million/US$1,260],” according to President Duque.

Vice Minister of Finance Juan Alberto Londoño added that the payroll-finance scheme will enable MSMEs to issue bonds to be acquired by the financial system.

The government also will waive mandatory pension contributions for the next three months, aiming to help both workers and employers to reduce expenses. However, those already retired will continue to receive their normal pensions, he added.