President Santos began his second term in office on August 7, 2014. Almost three years after the beginning of the peace negotiations, agreements have been reached on four out of five topics (illegal drugs May 2014), rural development (agreement in June 2013), political participation (agreement on December 2013) and transitional justice – restorative and reparative (September 2015). The last pending topic is the end of the conflict, that includes the disarmament and the demobilization of the guerilla fighters. During the signing of the justice agreement, on September 23rd 2015, the creation of a Special Jurisdiction for Peace was announced and it was decided that the final agreement should be signed by March 23rd 2016 at the latest. From that moment on, there will be a maximum timeframe of 60 days for the disarmament.

Under an effective macro policy management, Colombia’s growth was 4.6 percent in 2014 overcoming the initial effects of lower international oil prices. Growth in 2014 was above the regional average (1.5 percent) driven mainly by construction and services that helped compensate for a contraction in extractive activities. Growth in agriculture and manufacturing activities was modest. From a demand point view, economic activity was led by domestic private consumption and investment, which compensated for a slowdown in exports.

Further decreases in oil prices and expectations about the tampering of US monetary policy have been impacting the Colombia economy in 2015. Under this adverse external environment, growth is expected to slow down to 2.9 percent in 2015 and 3.2 percent in 2016, but remain about the highest in LAC.  

Unemployment reached a record low (9.1 percent in 2014), following important reforms to reduce non-wage labor costs. Despite the slowdown in economic activity, unemployment continued to fall in the first half of 2015 reaching record low levels in July (8.8 percent). Fiscal management continues to be among the strongest in the region. The government has complied with the fiscal rule that was first instituted in 2012. In 2014, the structural fiscal deficit was 2.3% of GDP, similar to the level in in 2013 and in line with the fiscal rule. Lower than expected oil prices granted the government an additional 0.1% of GDP deficit, so that the central government deficit reached 2.4% of GDP in 2014. We expect the structural fiscal deficit to be on the order of 2.2% of GDP in 2015, but the sharp decrease in oil prices could lead the total central government deficit to up to 3% of GDP, allowing the government to temporarily accommodate a decrease in oil related revenues.

Colombia’s flexible exchange regime is the first line of defense to the external shocks. The unfavorable external environment have contribute to a strong depreciation of peso. The US dollar reached COP$3000 in august 2015 up from an average of COP $2,000 in 2014. While the pass-through rate of exchange rate to inflation is relative low in Colombia, this large depreciation has temporarily pushed prices above the upper limit of the targeted band (2%-4%), to 4.46 percent in July. Inflation is expected to converge back to the rage by the end of 2015 in response to the country’s adequate monetary policy management.

The Country Partnership Strategy FISCAL YEAR 2012-16 aims at supporting the government’s development goals and guaranteeing the quality of the Bank’s financial, knowledge and convening services to respond to the specific needs of Colombia. It supports the government under three strategic themes:

 •Expanding Opportunities for Social Prosperity;

 •Sustainable Growth with Enhanced Climate Change Resilience; and

 •Inclusive Growth with Enhanced Productivity.

 A systemic Country Diagnostic is currently under preparation.

As of August 2015, Colombia is IBRD’s 7th largest Bank borrower with US$8.3 billion in outstanding debt. The active portfolio is composed of 11 IBRD and 1 stand-alone GEF project with IBRD net commitments of US$2.6 billion.

Colombia also has a considerable Trust Fund portfolio with US$63 m represented in a variety of sectors, with close to 30 percent (US$19m) in small and micro trust funds under US$5m. 

In FY15, 2 large Development Policy Financing operations for US$1.4 billion were approved. 

In particular, the Bank is supporting Colombia’s efforts to improve public sector management in municipalities aiming at reducing poverty and inequity in the regions. It also supports urban public transport; the Post-Conflict and Peace Consolidation process (mostly through a Multi-Donor Trust Fund, of which the World Bank chairs the steering committee); as well as long term disaster risk management and a catastrophe risk financing strategy, through the Bank’s Treasury.

The Bank is also helping to strengthen the national protected areas in Colombia, through the coordination between government agencies and the local population.

In addition, close to 2400 farms from 13 departments in Colombia have benefited to date from the sustainable cattle ranching project. The farmers have received technical assistance in environment friendly cattle systems. There are nearly 25,000 hectares under environment friendly cattle systems as of now.

Through the Regional Peace and Development Program, social, economic and environmental assets were generated for close to 90,000 people. More than 700 subprojects were implemented by social and community based organizations.

To read about more World Bank results in Colombia, click here.


Colombia: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments