Reforms promise brighter future
AFTER SUCCESSFULLY WEATHERING THE DEEP RECESSION OF 1999, COLOMBIA IS CURRENTLY EXPERIENCING VASTLY IMPROVED ECONOMIC CONDITIONS, WITH UPCOMING REFORMS AND THE AMBITIOUS 'PLAN COLOMBIA' SET TO FURTHER STRENGTHEN THE COUNTRY'S ECONOMY

Juan Manuel Santos Minister of Finance and Public Credit: has delivered

Colombia has received more than its fair share of unfavorable press, and while few countries or government administrations could have withstood the fallout from such international news media scrutiny, the government of President Andres Pastrana has thrived under the spotlight, and indeed welcomes the chance to present its case to the world and highlight its many achievements.
U.S. government support for Latin America’s oldest democracy has been steady, while savvy U.S. companies understand the strategic economic potential of Colombia and have been unwavering in their willingness to set up shop in the country and expand with local partners.

Colombia’s economic growth is expected to reach nearly 3% this year and inflation to fall to below 8%. Debt to GDP should stabilize around the 40% level after record increases over the past six years. Imports rose 15.1% in the first half of 2001, with US$2.3 billion of the total, or 35.7%, coming from the United States–Colombia’s largest trading partner.
The figures are impressive considering that just over a year ago Colombia was coming out of an economic downturn. Following the appointment of Finance Minister Juan Manuel Santos last year, the Pastrana government implemented a far-reaching series of economic reforms designed to regain credibility in the international financial markets. These structural reforms include: a substantial fiscal adjustment with the full support of the International Monetary Fund (IMF), budget expenditure reduction, creation of special economic zones, measures to enhance transparency in public finances, and constitutional reform of territorial transfers. The result of this program of reforms has been economic and financial stabilization. This translates as: completing the financing requirement for 2001 as early as May with a total of US$2.7 billion, as well as diversifying its financing sources to include Japan, Europe and the U.S.

ANDRES PASTRANA President of Colombia, has gathered support in the international community for his “Plan Colombia”.

Government officials are proud of the fact that in just one year the economy has been turned around and stabilized to the extent that there is once again an international financial presence in Colombia.
This ambitious program was also aimed at improving competitiveness, increasing transparency, easing non-tariff and bureaucratic roadblocks, doubling exports within three years, reducing corruption and–most importantly for the United States–modernizing industry and services.The initiatives will require a steady inflow of technology. And as that need grows, the country will be more and more open to U.S. companies–favored in the Colombian market because of their quality and value for money–that are looking to take advantage of the emerging opportunities.
Investors have recognized the marked improvement in policy initiatives. As Michael Corbat, Managing Director of Salomon Smith Barney notes, “the economic stabilization program of reforms implemented by Minister Santos and his team has been a key factor in achieving their funding objectives in the capital markets, such strategy has allowed them to successfully access the market.”

According to Deutsche Bank’s analysts, the overall policy mix has improved remarkably: from the combination of a loose fiscal and a very tight monetary policy, Colombia has moved to a tighter fiscal and looser monetary policy which has clearly helped to limit the negative impact of the global downturn. The analysts believe that the most concrete sign of a strong rebound in investor confidence in the country fundamentals is demonstrated by the fact that YTD returns on Colombia’s foreign currency sovereign bonds are the highest in the emerging market world.
Other analysts, such as New York-based IdeaGlobal, confirm that Colombia is now one of the best places to diversify risk among the emerging markets, thanks to the fiscal achievements of the current administration