On Wednesday, December 4th, President Juan Manuel Santos met with the Inter-American Development Bank (IDB), the World Bank (WB) and the International Monetary Fund (IMF) at IDB headquarters in Washington, D.C., in order to discuss multilateral cooperation with Colombia.
The meeting was held with the President of the IDB, Luis Alberto Moreno; Sri Mulyani Indrawati, Managing Director of the World Bank; David Lipton, First Deputy Managing Director of the IMF and other high-ranking officials.
The multilateral organizations commended Colombia’s efforts in achieving macroeconomic stability. For the past two years Colombia has shown economic growth of 4.9% on average, and has brought inflation to historically low levels (1.8% as of October 2013). Unemployment has decreased to 7.8% and 3.2 million jobs have been added in a three-year period.
Recognizing the continued challenge of fostering inclusive growth and reducing labor informality, the authorities approved a tax reform in 2012 to lower non-wage labor costs by half, which has already shown signs of spurring formal job creation this year.
Colombia has also adopted medium-term fiscal targets and implemented structural fiscal reforms. Public debt remains low and manageable (33.5% of GDP in 2012) and fiscal policy remains on track to meet the target for the central government in 2014.
To address infrastructure gaps and boost long-term growth, the government has embarked on a five-year infrastructure modernization plan that aims to better connect cities, ports and neighbor countries. Given the limited fiscal space to finance investment through the budget due to the projected decline in fiscal revenues associated with the end of the commodity boom, the government plans to involve the private sector in the provision of new projects.
As of November 2013, the IDB has an active project portfolio in Colombia totaling US$3.2 billion, while the WB’s portfolio in the country adds up to US$1.5 billion. In 2013 the IMF approved a two-year Flexible Credit Line to Colombia for US$5.8 billion. In addition to loans, the IDB provides Colombia with 135 technical assistance grants totaling US$100 million, while the WB is executing 57 grants for US$52 million. The IMF also provided technical assistance in the area of public finances.
The multilateral organizations congratulated the Santos administration for its prudent macroeconomic policies and reaffirmed their commitment to continue supporting development initiatives and structural reforms aimed at reducing inequality and raising long-term growth.