The IMF Working Papers series is designed to make IMF staff research available to a wide audience. Almost 300 Working Papers are released each year, covering a wide range of theoretical and analytical topics, including balance of payments, monetary and fiscal issues, global liquidity, and national and international economic developments.
Juan Manuel Lima, Johannes Wiegand, Enrique Montes, and Carlos Varela
INTERNATIONAL MONETARY FUND
We employ an extended version of the Allen et al. (2002) Balance Sheet Approach to examine macroeconomic vulnerabilities in Colombia between 1996 and 2003, based on an unusually rich data set. We find that vulnerabilities existing prior to Colombia's 1999 recession-high levels of private debt, a large negative foreign currency position of the corporate sector, and banks' exposure to stretched households and companies-receded subsequently. New vulnerabilities emerged, however, especially the high level of public debt accumulated until end-2003, and growing exposure of the financial sector to the sovereign.