Colombia’s recent participation in spring meetings of the International Monetary Fund (IMF), held in Washington, would have left a little encouraging environment for some officials of the Ministry of Finance.
The team led by Minister Germán Ávila, who officially assumed his position on March 18, attended these meetings shortly after his possession, in the middle of a complex fiscal landscape for the country.
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After the event, The IMF announced the temporary suspension of the flexible credit line (LCF) that Colombia kept active since 2009.
This instrument, more than a direct financing channel, has worked as an international confidence signal towards the country’s economy, facilitating access to resources with favorable conditions in financial markets.
Different sources that participated in the Annual Meeting of the International Agency agreed to point out that the presentation of Colombia would not have managed to transmit security or a clear course with respect to how it will face the current fiscal challenges, including the increase in deficit and the growth of public debt.
According to information known by Weekthe absence of a detailed and structured plan would have generated concern among the attendees of the IMF sessions. One of the people who was part of the National Delegation explained that: “The proposals in concrete documents with proper support must be materialized, not only ads of tax relief and measures built in the air.”
The source added that Minister Ávila’s ads about spending cuts were not enough to persuade the body. Although the minister has publicly indicated that adjustments are coming, these will only be detailed in the medium -term fiscal framework, provided to be presented in June.
In the context of meetings, Colombia would have arrived without a solid narrative on how it will address its current fiscal situation. According to testimonies collected by the environment, this lack of clarity would not only have influenced the IMF decision regarding the LCF, but also would have affected the mood of some officials who represented the country.
The source consulted indicated that the pause in the credit line was a possibility that had already been anticipated, but the spring meetings were considered to be a key instance to prevent the measure from being realized. The presentation of technical documents with sufficient livelihood was seen as fundamental for this purpose, but it was not achieved.
One of the elements that has also caught the attention of experts and observers is the number of changes that the head of the Ministry of Finance has had since the beginning of the current government. With four ministers in less than three years, continuity in the economic strategy has been affected, which could have influenced the evaluation of the IMF.
Minister Ávila has reiterated that there will be a reduction in public spending, but only when the fiscal framework will be known, it will be known to what magnitude and if these measures manage to respond to international expectations. Meanwhile, the expense continues to grow in the first quarter of the year, without the income accompanying it at the same rate.
