IMF approves new credit line for Mexico as fiscal outlook darkens
Central bank’s success in reducing inflation may be compromised by fiscal weakness
The International Monetary Fund approved a new flexible credit line (FCL) for Mexico on November 22, as the economy suffers stagnant growth and a challenging fiscal outlook.
The IMF’s approval will support the Bank of Mexico’s efforts to boost the economy with lower rates, but a weak fiscal balance may imperil the central bank’s strategy.
A weaker peso in 2016 and 2017 boosted year-on-year inflation over the 3% target to 6.6% in August 2017. The central bank started a sharp tightening cycle
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