Can IMF credit be used or not? President Petro explained this.

The International Monetary Fund (IMF) has placed two conditions on the renewal of its flexible credit line for Colombia. With this decision, the National Government announced that the evaluation process is ongoing and that it is working on implementing economic measures.

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Through his X account, President Gustavo Petro mentioned the issue and one of the reasons why the country could not use this financial instrument. According to the president, this would be because the country is already paying off a loan.

"The mistake of not being able to use the IMF loan, which would be crazy to do, is linked to the fact that a loan was already taken out that is being repaid. Duque took out the loan to combat COVID; it was used to subsidize the country's richest businesspeople," the head of state responded to a publication that mentioned that the organization's "credit card" had been suspended.

Petro also noted that his administration has made a commitment to pay this obligation.

"My government has made a commitment to pay Duque's debt, and we're already on our final payment, which we will make duly," he emphasized.

(Read more: IMF flexible credit suspension would make it harder for the country to seek debt)

(See: How the global debt markets in which Colombia issues bonds work)

Why was the renewal suspended?

The first thing to keep in mind is that the suspension of this measure does not imply a withdrawal of credit to Colombia. According to Roberto Steiner, former co-director of the Banco de la República, in an interview with 'W Radio,' it is strictly a postponement.

"They haven't taken away our 'credit card,' but they've suspended our right to use it. In June or July, a decision will be made on whether or not they will permanently take it away from us," he said.

The expert also addressed the consequences that could arise from not reactivating the renewal: "I think if you start speculating about what happens if we lose those funds, it's the same as losing a credit card you didn't plan to use. So that mitigates the negative effect somewhat."

The National Government has reported that it is making progress in implementing economic measures that take into account the evolution of both domestic and external economic conditions, as well as the achievement of the goals included in the National Development Plan. These include policies for managing revenue, expenditure, and public debt.

He also noted that the IMF's decision will remain in place until the ongoing Article IV consultation and a mid-term review of the credit are completed.

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