Colombia: Staff Report for The 2012 ARTICLE IV Consultation—Informational Annex
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International Monetary Fund. Western Hemisphere Dept.
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Colombia’s economy has been resilient to the adverse global shocks of recent years. Inflation has been subdued, credit growth has eased, and financial soundness indicators are strong. The strong balance of payments continues to put upward pressure on the Colombian peso. In 2013, growth is expected to rise and inflation to remain on target. Short-term risks to the outlook continue to be tilted to the downside. The central bank’s intervention policy is geared at containing exchange rate volatility and strengthening external buffers.

Abstract

Colombia’s economy has been resilient to the adverse global shocks of recent years. Inflation has been subdued, credit growth has eased, and financial soundness indicators are strong. The strong balance of payments continues to put upward pressure on the Colombian peso. In 2013, growth is expected to rise and inflation to remain on target. Short-term risks to the outlook continue to be tilted to the downside. The central bank’s intervention policy is geared at containing exchange rate volatility and strengthening external buffers.

Fund Relations

(As of November 30, 2012)

Membership Status: Joined: December 27, 1945; Article VIII.

General Resources Account:

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SDR Department:

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Outstanding Purchases and Loans: None.

Latest Financial Arrangements:

In millions of SDR
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Projected Payments to Fund (in SDR Million):

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Implementation of HIPC Initiative: Not applicable.

Implementation of Multilateral Debt Relief Initiative (MDRI): Not applicable.

World Bank Relations1

The current IBRD Country Partnership Strategy (CPS) for FY 12–16 aims to support selectively Colombia’s National Development Plan. The World Bank Group (WBG) is stepping up efforts to enhance development impact through selectivity, as a means to provide added value to the country. The WBG has been carrying out activities for which the Government or the private sector have expressed explicit need either through financial, knowledge, or convening services. These activities are combined as a results-focused package of support grouped under three strategic themes: (a) Expanding Opportunities for Social Prosperity; (b) Sustainable Growth with Enhanced Climate Change Resilience; and (c) Inclusive Growth with Enhanced Productivity. Each of these strategic themes has three areas of results with specified outcomes. In some cases, outcomes in this CPS cannot solely be attributed to the WBG since activities are often jointly accomplished with the Government or other partners.

For FY 13–16 the lending program is expected to be US$800−1,000 million per annum. Actual delivery of the lending program will depend on Colombia’s performance, IBRD lending capacity, demand from other borrowers, global economic developments, and disbursement profiles that keep exposure within the country limits.

Trust funds have continued to be an integral part of the Bank’s engagement with Colombia. As trust fund resources are not predictable for the purpose of the CPS, the WBG is ensuring that activities financed by trust funds follow the thrust of this strategy in agreement with the government counterparts.

The CPS thematic areas are managed under an enhanced thematic business model approach. This approach aims to improve the impact of the Bank’s engagement in Colombia. Financial, knowledge, and convening services are developed as a comprehensive package of support under each theme to deliver timely and flexible development solutions.

As of end of November 2012, Colombia was among the 10 top Bank borrowers in terms of IBRD exposure with US$7.4 billion debt outstanding, representing close to 6.8 percent of the IBRD’s total portfolio. Net commitments currently stand at US$2.5 billion of which US$1.2 billion remains undisbursed. The active portfolio is composed of 21 IBRD projects. During FY 12, the Bank approved three projects for a total of US$600 million. Total FY 13 lending is envisaged at around US$700 million and FY 14 US$450 million.

Operations Portfolio (IBRD/IDA and Grants)

As of November, 2012

(In millions of .U.S. Dollars)

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Loan Information (IBRD)

As of November, 2012

(In millions of U.S. dollars)

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Fiscal Year: July 1 - June 30

International Finance Corporation (IFC) Portfolio

(as of Nov. 30, 2012)

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Inter-American Development Bank Relations2

The Bank’s ongoing country strategy with Colombia (2012–2014) identifies the main targets of engagement in the areas of Transportation, Science, Technology, and Innovation, Trade and Integration, Access to Financial Services, Education and Vocational Training, Social Protection, Health, Water Supply and Sanitation, Housing and Urban Development, Risk Management.3 These areas are part of a comprehensive vision for the development process of the country, aimed at creating a “virtuous circle” between the objectives of increased growth, and reducing poverty and inequality. There are cross-cutting requirements associated with these areas, in order to overcome conditions of poverty and inequity, which are: (i) targeting actions and resources to a balanced, multidimensional approach to regional development in relation to public management and competitiveness, and (ii) recognizing both infrastructure development, and human and social capital development, as necessary factors for greater competitiveness, stronger institutions and better governance.

The sovereign guarantee lending envelope under the current Strategy was estimated at US$852 million per year, which total US$3.40 billion for the years 2012 to 2014. During 2012 the Bank approved US$508 million in sovereign guarantee operations, non-sovereign guarantee lending reached US$7.2 million, US$13.1 million were approved for Technical Cooperations, and US$4.25 million were approved for Investment Grants. This year disbursements of US$454.2 million took place.

The Bank portfolio is currently composed of 27 sovereign guarantee operations totaling US$2.86 billion, with a disbursed amount of US$1.73 billion (60 percent). A total of 14 operations for US$1.54 billion are concentrated in competitiveness, trade and integration areas (52 percent of the portfolio), 5 are operations for social development (18 percent) and 8 are operations of governance and institutions (30 percent). The non-reimbursable technical cooperation portfolio includes 109 operations with an approved value of US$68.9 million.

The current portfolio of private sector initiatives (non-sovereign guarantee) in Colombia consists of 7 loans, totaling US$219.08 million. This portfolio supports interventions in the transport sector, infrastructure financing, expanding low-income families’ access to commercial credit and the promotion of international trade. In addition, the Multilateral Investment Fund has a portfolio of 38 operations valued at US$40.46 million that supports microfinance institutions in underserved areas, provides seed capital and helps improve management practices of small and medium enterprises.

Colombia Sovereign Loan Portfolio

As of December 26, 2012

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Statistical Issues

(as of December 26, 2012)

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Colombia: Table of Common Indicators Required for Surveillance

As of December 21, 2012

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Daily (D); Weekly (W); Monthly (M); Bi-monthly (B); Quarterly (Q); Annually (A); Irregular (I); Not Available (NA).

Any reserve assets that are pledged or otherwise encumbered should be specified separately. Also, data should comprise short-term liabilities linked to a foreign currency but settled by other means as well as the notional values of financial derivatives to pay and to receive foreign currency, including those linked to a foreign currency but settled by other means.

Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.

Foreign, domestic bank, and domestic nonbank financing.

The GG consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.

Including currency and maturity composition.

Includes external gross financial asset and liability positions vis-à-vis nonresidents.

Reflects the assessment provided in the data ROSC published in October 2006 for the dataset corresponding to the variable in each row. The assessment indicates whether international standards concerning concepts and definitions, scope, classification/sectorization, and basis for recording are fully observed (O); largely observed (LO); largely not observed (LNO); not observed (NO); and not available (NA).

Same as footnote 8, except referring to international standards concerning (respectively) source data, assessment of source data, statistical techniques, assessment and validation of intermediate data and statistical outputs, and revision studies.

1

Prepared by World Bank staff.

2

Prepared by Inter-American Development Bank staff.

3

The Strategy for 2012–14 was approved in February 2012.

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