At the end of its 2022 Mission in Colombia, the International Monetary Fund (IMF) was cautious about Colombia’s economic outlook but supports the different policies of the Government of Gustavo Petro. The specialists of the entity in charge of ensuring the stability of global currencies and known for its loans to countries in difficulty, highlight in their final report that the 2022 tax reform, the 2023 financial plan and the interest rate hikes are positive, and also shows its support for the reforms proposed by the Government for the energy transition and the diversification of exports.
In the statement revealed that Tuesday, the IMF highlighted the good results of the Colombian economy. In the words of the report, “Despite the challenges, the Colombian economy exceeded expectations in 2022, growing at one of the fastest rates among emerging economies.” The official growth data for 2022 will be released this Wednesday, and the multilateral estimated that it will be a strong 8%, in line with the forecasts of other expert sources, such as the Bank of the Republic or the OECD.
However, the Fund also highlighted that there are great risks. On the one hand, the international economy is still going through a bad time, for which in 2023 there will surely be less global growth and raw materials, such as those exported by Colombia, will have lower prices. On the other hand, he also recalled the presence of internal problems, such as high inflation or the increase in the current account deficit from 5.6% of GDP to 6.3%.
But the multilateral was not limited to microeconomic figures. He also supported the Government’s vision regarding the country’s economic structure. “The goal of reducing Colombia’s dependence on oil and coal is commendable,” he wrote, showing his support for one of Petro’s big goals.
He also supported the energy transition, although he made it clear that it cannot be done in one fell swoop: “A successful transition would require developing a well-communicated and gradual plan that balances the energy needs of the domestic economy and its ability to generate foreign currency in a transition context. towards low carbon emissions from the global economy”. It coincides with the position of the Minister of Finance, Jose Antonio Ocampo, who in November told this newspaper that “The goal is to maintain oil production, at least during a 15-year transition period.”
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In sum, he concluded that the country must “Progress prudently with key structural reforms, together with a continued robust communication strategy, will be essential to boost productivity, improve inclusion and ensure a gradual and well-sequenced transition towards a greener economy and more diversified”. The IMF does not directly mention the proposals for social reforms that, led by the health company, are beginning to occupy the public debate in the country, although it welcomes the proposals of the National Development Plan to “promote equity and security, emphasizing eradicating the extreme poverty and hunger, reduce the great regional disparities, achieve total peace in Colombia, and protect the environment.
With this report, the policy headed by Minister Ocampo receives significant support, not only because of the symbolism, but also because it can help reduce or allay investor fears. It contrasts with the pessimism revealed by the most recent monetary policy report from the Banco de la Republica and in general the economic slowdown data for this year. Although part of the same data, or similar data, in his opinion it is a “necessary cooling” of the economy, to allow it to grow in a more orderly and sustained manner, and achieve a “more equitable and green economy”. .
