In April 2020, Banco de México announced up to 3.3% of GDP in several financing facilities. For Mexico, the IMF’s Flexible Credit Line was a highly valued complement for our external liquidity buffers at a time of acute stress.
In addition to avoiding a risk aversion spiral, supporting the recovery through an orderly and sustained reduction of interest rates along the yield curve is needed. This implies being mindful not only of short-term interest rates, but also of medium- and long-term rates, which in emerging markets are largely determined by risk premia.