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Overview

  • President Ivan Duque Marquez began his presidential term on August 7th, 2018, and it will end on August 7, 2022. Duque, from the Democratic Center party, won the elections by achieving 53.95% of the votes (10,351,304 votes) while his rival Gustavo Petro reached 41.83% (8,024,697 votes). The main pillars of its government are legality, entrepreneurship, and equity, with transversal axes in terms of infrastructure, environmental sustainability and innovation.

    Colombia has received a massive and accelerating inflow of migrants from Venezuela. Approximately 1.8 million Venezuelans have arrived in Colombia as of December 2020, according to Colombian official statistics. Colombia has taken a leading role in adopting an open borders policy and implementing good practices in the provision of services to Venezuelan migrants and returned Colombians in areas such as education to health, services of employment and humanitarian aid.

    Colombia has a track record of prudent macroeconomic and fiscal management, anchored on an inflation targeting regime, a flexible exchange rate, and a rule-based fiscal framework, which allowed the economy to grow uninterrupted since 2000. Also, Colombia halved poverty over the past ten years.

    However, productivity growth is low and it has actually been a drag on economic growth. A large infrastructure gap, low labor productivity, low trade integration and barriers to domestic competition are among the factors that weigh on total factor productivity. Exports are highly concentrated in non-renewable commodities (oil in particular), which increases the exposure of the economy to price shocks. Finally, Colombia is one of the countries with the highest income inequality and labor market informality in Latin America.

    After slowing down to 1.4 percent in 2017, economic growth accelerated to 3.3 percent in 2019, driven by robust private consumption and stronger investment. Growth was on track to accelerate further in 2020, but the COVID-19 pandemic hit the economy hard, causing a very deep recession.

    The Government responded promptly to the crisis and took decisive actions to protect lives and livelihood, and to support the economy. On the fiscal front, the Government announced a sizable fiscal package for 2020 totaling over COP 31 trillion (or almost 3 percent of 2019 GDP), to provide additional resources for the health system, increase transfers for vulnerable groups through the expansion of existing programs and the establishment of new ones (Ingreso solidario, an unconditional cash transfer program, and VAT reimbursements for low-income segments of the population), delay tax collection in selected sectors, lower tariffs for strategic health imports, and help hard-hit firms pay employees. In addition, the government also set up special lines of credit and loan guarantees for firms in selected sectors or that have been deeply affected by the crisis, potentially totaling 72 trillion (or 6.8 percent of 2019 GDP). To ensure adequate fiscal support, the suspension clause of the fiscal rule was activated for 2020 and 2021. On the monetary front, the central bank cut its intervention rate 250 basis points between March and September and reduced it to its lowest historical level.  In addition, it introduced a broad range of measures to increase liquidity.

    These measures are expected to mitigate the impact on the economy of COVID-19 and of the public health measures taken to contain its spread. Yet, the economy is projected to contract 7.2 percent in 2020. A rebound in growth is expected for 2021-2022, provided that the pandemic is short-lived. The low interest rate environment, facilitated by the central bank, is expected to boost private consumption growth to the extent that COVID-19 containment measures are eased. It is also expected to facilitate a gradual rebound in investment as major infrastructure projects such as the 4G road and the Bogota metro projects resume at full speed. Inflation is expected to fall towards the lower part of the central bank’s targeted range, as exchange rate pass through pressures are tempered by weak demand.

    The lower oil prices and reductions in global demand are expected to compensate the demand-driven drop in imports, while strong inflows of remittances and lower dividends to foreign direct investors are expected to cause the current account deficit to improve slightly, from 4.2 percent of GDP in 2019 to 4.1 percent of GDP in 2020. A normalization of trade flows and an unfolding of backlogs of dividend payments to foreign direct investors is expected to cause the current account deficit rebound in 2021, until it stabilizes at 4.2 percent of GDP in 2022.

    Beyond the medium-term, the outlook depends on the duration and severity of the crisis, the way and speed at which the fiscal deficit will be reduced, and the country’s ability to address existing structural bottlenecks.

     

    Last Updated: Oct 09, 2020

  • The Country Partnership Framework (CPF-Fiscal Year 2016-21) aims to support the government's development goals and guarantee the quality of the World Bank Group's (WBG) financial, knowledge and convening services to respond to the specific development needs of Colombia. The program supports the government under three strategic pillars:

    •Fostering Balanced Territorial Development;

    •Enhancing Social Inclusion and Mobility through Improved Service Delivery; and

    •Supporting Fiscal Sustainability and Productivity.

    Colombia is IBRD’s 6th largest Bank borrower with US $11.9 billion in outstanding debt. The active portfolio includes 15 projects totaling US $3 billion in IBRD net commitments. The current portfolio also includes co-financing from the Global Concessional Financing Facility (GCFF), to support Colombia in managing the migration from Venezuela.

    Last Updated: Oct 09, 2020

  • Total new World Bank commitments to Colombia in the first 9 months of 2020 have reached US$1.75 billion, in addition to the US$250 million disbursement of previously committed contingent financing triggered by the national emergency due the COVID-19 crisis. These projects include the COVID-19 Crisis Response DPF($700m), the DPF for Territorial Development ($400m), Support to the Financial Sustainability of the Colombian Health System ($150m IBRD; $35m GCFF), and a $500m DPF (approved September 2020) to support the Government in its efforts to sustain access to critical infrastructure services for firms and households in the aftermath of COVID-19.

    The Bank’s current financial engagement focuses on health, resilient infrastructure, fiscal sustainability, energy, competitiveness, environment, governance, higher education, migration, rural land cadaster, transport, water and sanitation, disaster risk management and agriculture,

    Additional lending operations scheduled for approval during the remained of FY21 include two IPF operations to promote resilient and inclusive housing (USD 100m IBRD, plus GCFF and GPG funds) and to support Colombia’s integrated social registry SISBEN for USD 300 million. 

    Last Updated: Oct 09, 2020

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LENDING

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

*Amounts include IBRD and IDA commitments


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Additional Resources

Country Office Contacts

COLOMBIA: (57) 1 - 3263600
Cr 7 # 71 - 21, Torre A, piso 16
jbedoyavilla@worldbank.org
USA +1 202 473-1000
1818 H Street NW, Washington, DC 20433, USA
jbedoyavilla@worldbank.org