(Bloomberg) -- Mexico and the International Monetary Fund are discussing a plan to reduce the nation’s $63 billion precautionary credit line by 20% when it comes due for renewal next month, after economic risks from the global pandemic subsided.

The IMF and the Mexican authorities last week talked about the proposal to cut access to $50 billion, according to three people familiar with the discussions, who asked not to be named because the conversation was private.

The talks came as part of the visit to Washington last week by central bank Governor Alejandro Diaz de Leon and Finance Minister Rogelio Ramirez de la O. The pair met with IMF officials including Managing Director Kristalina Georgieva last Wednesday during IMF and World Bank annual meetings.

The plan calls for lowering Mexico’s access to the line to 400% of the nation’s quota, or its share in the IMF, from the current 500%, the people said. Two of the people said Mexico intends to further reduce the credit line next year. The plan isn’t final and still requires approval from the IMF board, they said.

The IMF intends for country credit lines to be phased out over time, and the reduction is part of plans to do so for Mexico. The nation had been due to make the cut last November, but instead at that time won approval from the IMF to maintain the line at its current $63 billion based on risks from Covid-19.

Reducing the credit line would cut the annual fee Mexico pays for access by almost $40 million, to $130 million.

Mexico also is benefiting from $12.2 billion in reserve assets, known as special drawing rights, that the nation’s central bank received in August as part of a global allocation of $650 billion.

Mexico’s finance ministry press office didn’t immediately have a comment. Press offices at the central bank and IMF declined to comment.

Unconditional Credit

The flexible credit line, or FCL for short, is a form of pre-approved lending and comes without conditions on how the money is spent. The IMF has used the FCL over the past decade to build a safety net under some of the most stable economies in Latin America, one of the global regions hit hardest by the pandemic last year.

The IMF makes FCLs available to nations with a track record of prudent economic policy, but which also are vulnerable to external shocks. Chile and Peru last year joined Mexico and Colombia in winning access.

Mexico was the first country in the world to get the credit line when it was created in 2009 during the global financial crisis and has been voluntarily reducing its access in the last several years. The line was cut from $88 billion in 2016 to $74 billion in 2018 after the negotiation of an updated free trade deal eased concern about the relationship with the U.S. It was cut again to $61 billion in 2019, when it was last renewed, for two years.

Once approved, the line’s value fluctuates slightly in dollar terms because it’s set in special drawing rights, the fund’s accounting unit.

For years, recipients didn’t draw on the FCLs, treating them like backup financing out of concern that using the funds would spook investors. But Colombia in December drew $5.4 billion from its line to fight the pandemic as the nation suffered the deepest slump in its history.

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