Itaú BBA - Macro Scenario – Colombia: Knocking on the IMF’s door

Macro Latam

< Back

Macro Scenario – Colombia: Knocking on the IMF’s door

October 1, 2020

The FCL eligibility shows Colombia’s structural strengths, but the need to access it reflects a more challenging fiscal scenario.

For the version with all charts and tables, please open the attached pdf file

With the economy fully reopening in September, activity indicators are expected to consolidate the recovery already underway. We expect a 6% GDP contraction this year, with a bounce-back to +4.5% in 2020. Nevertheless, more-moderate fiscal support relative to peers could mean a steeper decline in activity.

The central bank extended the easing cycle by 25 bps, to 1.75%, following a low inflation print in August and inflation expectations below the 3% target. Yet the communication tone signaling of limited room and prevalent risks (from capital outflows) favor a pause ahead. 

Colombia’s flexible credit line from the IMF was increased to USD 17.3 billion, from USD 10.8 billion, with the Treasury intending to withdraw USD 5.3 billion. While the announcement came as a surprise, the amount of foreign currency resources the Treasury will use this year seems unchanged from the latest guidance.

João Pedro Bumachar
Miguel Ricaurte
Carolina Monzón


For the version with all charts and tables, please open the attached pdf file



< Back