26 October 2005

Colombia's Economy on Upswing, Says International Monetary Fund

IMF forecasts 4 percent growth rate, low level of inflation for 2005

By Eric Green
Washington File Staff Writer

Washington -- Colombia's economy is on the upswing, with the country's gross domestic product projected to rise by 4 percent in 2005, says the International Monetary Fund (IMF).

In an October 25 statement, the IMF said the Colombian government's strong economic policies are allowing the nation's economy to benefit from a favorable global economic environment.

The growing economy in Colombia, said the organization, is helping the country to reduce unemployment further, and inflation in 2005 is expected to remain at the nation's lowest level in decades.

The IMF said Colombia's export sector has strengthened, benefiting from high world commodity prices, "robust growth" in nontraditional exports, and strong inflows of foreign direct investment.

Colombia's improved fiscal position results from gains in tax administration, and from continued control over spending and the effects of higher oil prices, according to the organization.

Colombia's economic outlook for 2006 is favorable, the IMF said, with "good prospects for sustained growth and declining inflation." Fiscal policy is set to remain "prudent," said the IMF, with a combined public-sector deficit of no more than 2 percent of gross domestic product.

Colombian authorities already have implemented several key elements of a revised budget code and intend to implement as many of the remaining elements as possible through executive action, said the IMF.

The organization added that the Colombian government intends to build political support for additional key medium-term economic reforms, such as strengthening tax policy, improving the system of revenue-sharing and reducing the extent of revenue-earmarking.

"These policies will help lay the foundation for continued growth" in Colombia, said the IMF.

The Bush administration is touting a proposed U.S.-Andean free-trade agreement that it says will also improve Colombia's economy. Colombia, Peru, Ecuador and Bolivia would be included in the agreement.

A U.S. trade official said in an October 21 background briefing that negotiators should intensify their efforts to resolve impediments to the trade pact. (See related article.)

The official also said President Bush will meet with leaders of Andean countries at the November 4-5 Summit of the Americas in Mar del Plata, Argentina. For additional information, see Summit of the Americas.

The IMF statement on Colombia’s economy is available on the fund’s Web site. See also a related article, “IMF Upbeat on Economic Outlook for Colombia, Dominican Republic.”

(The Washington File is a product of the Bureau of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)