Colombia: Prepared for the Crisis

BOGOTA — They may disagree on Colombia’s economic growth rate this year, but government leaders and the private sector agree on one thing: That the South American country is well-prepared to face the growing international crisis.

”We reached this crisis under better conditions [than in the past], but we face risks,” President Alvaro Uribe told Latin Business Chronicle and a group of foreign journalists visiting the presidential palace here. International reserves have barely been touched and are significantly higher than in the past, exports have grown significantly, public debt in foreign currency has been reduced, as has the country’s fiscal deficit, he points out.

Jorge Londoño, president of Colombia’s largest bank Bancolombia, agrees. “We are in a good condition to face this crisis,” he said during a meeting at the bank’s brand-new headquarters in Medellin.

The banking system is solid, and the country has always had a good reputation for its solid macro economic management, he says. “We have been able to face the crisis with a soft landing thanks to the [central bank’s interest] rate cuts,” Londoño says.

Another benefit is that Colombia is not as globalized as many other countries, he points out. In fact, Colombia is the second-least globalized country in Latin America, according to the 2008 Latin Globalization Index from Latin Business Chronicle.

SUCCESSFUL BOND SALE

Even more encouraging to Colombians was the successful sale of $1 billion in government bonds last month, a sale that was twice oversubscribed, points out Luis Carlos Villegas, president of the powerful business organization ANDI.

Colombia last year replaced Chile – the traditional poster boy for foreign investment attractiveness – as Latin America’s third-largest recipient of foreign direct investment. Only Brazil and Mexico, the region’s top two economies, received more foreign investment, according to Colombia’s foreign minister Jaime Bermudez.

One major difference compared to the last major crisis Colombia...

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Keywords: China, FDI, Free Trade Zones, GDP Growth, Poverty, Taxes, Trade, United States