At the end of her visit to Colombia, a Mission of the International Monetary Fund (IMF) reveal the main conclusions of the review of Article IV on Colombia.
Despite international challenges, the Colombian economy exceeded expectations in 2022 and grew at one of the fastest rates among emerging economies, thanks in part to private consumption. However, the body says that there are already incipient signs that it is starting to cool down.
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Growth is projected to have a marked slowdown in 2023 due to the tightening of macroeconomic policies, the slowdown of the world economy and the higher costs of indebtedness in the world.
Furthermore, as external headwinds remain elevated, as global financial conditions could hold up more abruptly than anticipated, with negative repercussions for commodity prices, capital outflows, and domestic demand.
“Internal risks cannot be ruled out; special care is needed to manage and communicate the sequence of reforms and that macroeconomic policies are sufficiently restrictive to guarantee the convergence of inflation towards the target and the effective mitigation of fiscal and external displacements”, says the organization.
Likewise, he says that it is necessary to maintain a continuous trajectory of implementing very solid policies, which includes continuing to comply with the fiscal rule and the inflation-targeting framework.
«We must move prudently with key structural reforms, along with a continued robust communication strategy, it will be essential to boost productivity, improve inclusion and ensure a gradual and well-sequenced transition to a greener and more diversified economy,» says the agency. .
Specifically, regarding the reforms, he says that a well-designed and executed energy transition and export diversification plan is vital to ensure sustainability and resilience in the medium term.
“The goal of reducing Colombia’s dependence on oil and coal is commendable. A successful transition would need to develop a well-communicated and gradual plan that balances the energy needs of the domestic economy and its foreign exchange-generating capacity in a context of the global economy’s low-carbon transition,” he said.
This transition will have to be complemented by efforts to diversify Colombia’s export base with measures that strengthen the investment climate and enhance human capital, trade openness, and competitiveness.
