IMF Executive Board Completes Final Review Under Colombia's Stand-By ArrangementPress Release No. 06/235
October 31, 2006
The Executive Board of the International Monetary Fund (IMF) has completed the third and final review of Colombia's performance under an 18-month SDR 405 million (about US$597.6 million) Stand-By Arrangement approved on April 29, 2005 (see Press Release No. 05/95). Colombia has not drawn under the arrangement, and the authorities have indicated that they will not make any drawings before the arrangement expires on November 2, 2006.
Following the Executive Board's discussion of Colombia on Monday, October 30, 2006
Mr. Takatoshi Kato, Deputy Managing Director and Acting Chair made the following statement
"Colombia's economy continues to perform well in 2006. Strong economic growth is helping to lower unemployment and poverty, while inflation is declining in line with the authorities' targets. The external position remains robust, supported by favorable terms of trade and sizable net capital inflows, while the continued moderation in the combined public sector balance will reduce public debt further. The economy has recovered swiftly from the turbulences in international financial markets earlier this year, underscoring the increased resilience of the Colombian economy in the face of shocks.
"While demand policies will need to guard against the risk of overheating in the short-term, the government's macroeconomic policies aim at continuity over the next four years, consistent with the medium-term goals envisaged by the authorities in the Fund-supported programs. In this respect, the authorities are framing fiscal policy with the goal of reducing public debt to 40 percent of GDP by 2010, while monetary policy will aim at lowering inflation to international levels over the medium term in the context of a flexible exchange rate policy. The authorities are proposing structural reforms to raise sustainable economic growth and improve social conditions, with specific reforms steps proposed in the areas of taxes, intergovernmental transfers, and the commercial orientation of public enterprises. In the coming months, the authorities will present legislation to deepen domestic financial markets and to conclude a free trade agreement with the United States.
"Over the medium-term, the authorities' strategy of continued reforms within a supporting framework of macroeconomic stability will enable the economy to continue to enjoy strong investment-led growth and support a sustained reduction in poverty," Mr. Kato said.