On August 11, Colombia’s largest lender Bancolombia cut its GDP forecast for 2015 from 3.4% to 3.1% and from 3.7% to 3.1% for 2016, saying the list of external risks to the economy has grown.
Episodes of financial stress in China and credit rating downgrades in some of Colombia’s regional peers including Brazil and Ecuador have exacerbated existing risks — including low oil prices, economic slowdowns in Colombia’s trade partners, and a significant currency devaluation amid the tightening of US monetary policy.
Colombia’s central bank Banco de la República opted to keep interest rates at 4.5% for the 11th consecutive month on July 31. The decision was in line with analysts’ expectations but was not unanimous; some board members voted for a rate rise, suggesting that BanRep may soon act to combat mounting inflation as a result of the peso’s devaluation.
However, there was some good news for Colombia’s squeezed public finances, in the form of a 7.8% year-on-year increase in tax collection in July — from COP $9,000bn in July 2014 to COP $9,700 billion (US $3.25bn) last month — according to the DIAN. Revenues on VAT and import taxes increased by 18%, while income tax was up 11%.
The year-to-date total is up around 6.5% versus last year, said the DIAN.
Infrastructure
The Santos government’s flagship 4G infrastructure programme received its first firm financial commitment with US investment bank Goldman Sachs agreeing to provide US $1.2 billion in financing for three road building projects.
Construction companies Mario Huertas, MECO, El Cóndor, Ingeniería de Vías and Pavimentos de Colombia will be building the Girardot to Puerto Salgar, Pacific 3 and Barranquilla Corridor highways.
Goldman Sachs is likely to raise the funds, which will be partly denominated in pesos and partly in dollars, via project bond issues in local and international capital markets. The loans have varying maturities of up to 20 years.
People
The National Federation of Coffee Growers (Federacafé) has appointed Roberto Vélez Vallejo as its new general manager after he beat Luz Adriana Mejía and Luis Guillermo Vélez in a vote.
Finance minister Mauricio Cárdenas said that he supported the appointment, reiterating the ministry’s “commitment to the success of the coffee industry” and saying that Federacafé would “play an important role in the country post-conflict”.
Vélez Vallejo, a former ambassador to Japan, UAE and Malaysia and with a more than 20 year association with the federation, said that the needs of Colombia’s coffee growers “would not wait”.
Juan Carlos Echeverry, the former finance minister now in charge of state oil giant Ecopetrol has hired María Fernanda Suárez Londoño to take the position of CFO. Suárez Londoño previously worked under Echeverry when she ran Colombia’s public credit unit during his tenure as minister.