IMF Publishes its 2024 Report on Economic Situation in Colombia

The International Monetary Fund (IMF) recently unveiled a report focusing on Colombia’s economic climate. This analysis stems from the IMF’s Article IV consultations, an annual process involving discussions with member countries. As part of these consultations, an IMF delegation visits the nation in question to assess its economic and financial status. Following their assessment, the team offers recommendations and monitors the country’s economic strategies.

IMF report’s key findings on Colombia’s economy

In its report, the IMF highlighted the robustness of the Colombian economy but also pointed out the risks associated with the El Niño climatic phenomenon. The IMF forecasted a GDP growth of 1.1 percent and a reduction in inflation to 5.3 percent, down from the current 7.35 percent, by the end of 2024. The organization commended Colombia’s adherence to its Financial Sector Assessment Program but emphasized the need for an improvement in productivity to boost economic growth, noting that this has been an issue in Colombia since the 1990s. Indeed, when compared to other Andean Union countries, such as Chile and Peru, Colombia ranks more than 10 points lower. The organization specifically highlighted deficiencies in agriculture, construction, and services, pointing out the necessity for pro-production policies and recommending that Colombia diversify its exports.

The IMF also observed a relative decline in domestic investment, with gross private domestic investment as a percentage of GDP falling from 19.1 percent in 2020 to 12.8 percent in 2023, and a forecasted 12.9 percent for 2024. Conversely, Foreign Direct Investment (FDI) has risen, reaching a decade-high of US$13 billion in 2023. Last year, the primary investors in Colombia were the US, Spain, and Panama, accounting for three-quarters of the total FDI in the country.

An historical partnership

The IMF has been a longstanding partner of Colombia. In 1999, during a critical recession, the IMF extended for the first time a US$2.7 billion loan to Colombia. Later, in 2009, Colombia was incorporated into the Flexible Credit Line, an IMF program designed for crisis prevention and management, aimed at supporting countries that demonstrate good economic management. As a part of this program, Colombia received a US$10.5 billion loan from the organization. Since then, Colombia has consistently secured new loans under the Flexible Credit Line agreement, with the most recent loan, amounting to US$9.8 billion, being granted in April 2022.