IMF says Colombia has a strong policy framework

WASHINGTON

An International Monetary Fund (IMF) mission, led by Ms. Valerie Cerra, visited Bogotá from November 6-16, 2012 to hold the annual Article IV consultation.i The team held discussions with the authorities and the private sector about recent economic and financial developments, and the nearand medium-term outlook. At the end of the mission, Ms. Cerra issued the following statement in Bogotá on November 16:

“Colombia has a strong policy framework, which has underpinned its resilience to the global turbulence of recent years. Prudent monetary and fiscal management, a flexible exchange rate, and a sound financial system helped mitigate the impact of those external shocks and stabilize growth relative to peer countries, as illustrated by the particularly buoyant economy activity in 2011. “The moderation of growth observed in 2012 is largely the consequence of the demand management policies adopted last year to contain risks. The monetary tightening and macro-prudential measures to stem high credit growth and the measures to reduce the fiscal deficit and public debt have brought about a welcome moderation in aggregate demand. Ripple effects from the weak external environment and unexpected supply shocks also have contributed to dampen economic activity. Reflecting all these factors, real GDP in 2012 is projected to be slightly lower than 4½ percent.

“In 2013 and beyond, we expect growth to hover around 4½ percent (which we regard as Colombia’s sustainable growth rate) and inflation to remain within the 2-4 percent target range. The stance of monetary and fiscal policy planned for 2013 seems consistent with the expected pickup in economic activity.