Beschreibung:
EXECUTIVE SUMMARY Context: Mexico’s growth is recovering, supported by strong export demand, while inflation pressures remain contained. The implementation of wide-ranging structural reforms is expected to boost potential growth in the medium term. The current account deficit is projected to remain broadly stable as a share of GDP, and the real exchange rate is judged to be in line with fundamentals. The authorities are committed to maintaining prudent policies. Nevertheless, Mexico’s strong trade and financial links to the global economy, while a sign of Mexico’s economic strength, make it susceptible to a retrenchment of global risk appetite. Risks: An abrupt surge in global financial market volatility, caused by uncertainties related to the unwinding of the U.S. monetary policy stimulus or heightened geopolitical tensions, could lead to a reversal of capital flows to emerging markets, including Mexico. A rise in emerging market risk premiums could affect not only portfolio flows, but also FDI flows. FCL: The authorities are requesting a new two-year precautionary FCL arrangement in the amount of SDR 47.292 billion (1,304 percent of quota, approximately US$72 billion) and the cancellation of the current arrangement, approved on November 30, 2012. They consider that, in an environment where external risks remain elevated, an FCL arrangement in the amount requested will play a critical role in supporting their overall macroeconomic strategy, preserving investors’ confidence, and providing insurance against adverse global risks. Staff agreed with the authorities that it would be premature to reduce access under the FCL in the case of Mexico, given the proximity to the takeoff window for the policy interest rate in the U.S. The authorities stated that, conditional on a reduction of global risks, they intend to cut access to Fund resources in any subsequent FCL arrangements, with a view to gradually phasing out Mexico’s use of this arrangement. In the staff’s assessment, Mexico continues to meet the qualification criteria for access under the FCL arrangement. Fund liquidity: The proposed commitment would have a manageable impact on the Fund’s liquidity position. Process: An informal meeting to consult with the Executive Board on a possible FCL arrangement for Mexico was held on November 7, 2014