Latest news with #GermanAvila
Bloomberg
13 hours ago
- Business
- Bloomberg
Colombian Inflation Slows More Than Forecast to Lowest Since 2021
Colombian inflation slowed more than expected in May to its lowest level since 2021, potentially bolstering the arguments of Finance Minister German Avila who is calling for much deeper interest rate cuts. The annual inflation rate fell to 5.05%, from 5.16% in April. That was lower than expected by analysts surveyed by Bloomberg, whose median forecast was 5.12%.
Bloomberg
4 days ago
- Business
- Bloomberg
Finance Chief Signals That Colombia Will Suspend Fiscal Rule
Colombian Finance Minister German Avila signaled that the nation will suspend its fiscal anchor and also called for substantial interest rate cuts. Complying with the fiscal rule, or balanced budget act, 'as if it were a religion' would paralyze the state and the economy, Avila told bankers in a speech in Cartagena.
Reuters
4 days ago
- Business
- Reuters
Colombia will not paralyze economy to comply with fiscal rule, says minister
BOGOTA, June 6 (Reuters) - Colombian Finance Minister German Avila said on Friday that "paralyzing" the economy to comply with the country's fiscal rule is not an option and that the government will take steps, including increased borrowing, if needed to ensure growth. His remarks follow news that Colombia may invoke an "escape clause" to suspend compliance with the fiscal rule governing government finances.
Reuters
30-04-2025
- Business
- Reuters
Why did the IMF block Colombia's access to a credit line?
NEW YORK/BOGOTA, April 30 (Reuters) - The International Monetary Fund said on Saturday it had set conditions for Colombia's access to its $8.1-billion Flexible Credit Line, a precautionary tool for crisis prevention and mitigation, effectively cutting access for the country from that cash. Colombia had access to a similar tool since 2009, but only made use of it once in 2020 when the pandemic wreaked havoc on the global economy. But the IMF move shines a fresh light on the country's fiscal issues, which have been troubling financial markets for months. Analysts said the implication of losing the FCL access was a rise in borrowing costs, which was already seen in an April 15 Eurobond offering. WHAT IS AN FCL? The FCL is a fund program that requires the applicant country to have strong economic fundamentals and institutions, and a willingness to keep both. It can last for one or two years and has no preconditions once triggered. To qualify for continued access to the program, a government needs a "very positive assessment of the country's policies" in a yearly visit by the IMF to check on policy and economic direction - internally called an Article IV Consultation, according to the fund's website. Countries should also follow criteria that include a track record of capital market access at favorable terms, have low and stable inflation, and data transparency. WHAT IS COLOMBIA'S FCL? The IMF approved Colombia's current FCL in April 2024. The South American country has had access to that type of program since 2009, tapping it once in 2020 with a then $5.4-billion draw to cover budget needs during the pandemic. Colombia's current $8.1-billion FCL was approved to replace the 2022 one. Bogota said it would treat the arrangement as "precautionary," meaning it does not expect to draw unless there is an unforeseen situation. WHY WAS COLOMBIA'S ACCESS CONDITIONAL? The two-year arrangement requires an Article IV visit that results in a report followed by a midterm review to make sure access to the facility remains uninterrupted. However, Colombia did not finalize an Article IV report with the fund. In visits to Bogota in mid-February and early April, engagement has been "close," according to the IMF. Between those visits, German Avila was sworn in as new finance minister. His predecessor resigned after three months amid clashes over budget cuts, and hours after a labor reform championed by President Gustavo Petro was rejected by lawmakers. "Engagement continues as the authorities work on plans to reduce the fiscal deficit this year and going forward," an April 18 IMF staff statement said, adding the government was working on the policies underpinning projected revenue gains and necessary spending adjustments to meet the overall fiscal deficit target. The government announced this year it would cut its 2025 budget by 12 trillion pesos ($2.85 billion) to 511 trillion pesos, but an independent office said this month an additional adjustment of some 46 trillion pesos ($11 billion) is needed to meet the fiscal rule. While the government said it had complied with the fiscal rule last year citing technicalities, analysts and experts said that was not the case. WHAT NEXT? The IMF and Colombia remain engaged in Article IV consultations but until those are completed, there will not be an FCL midterm review. It is unclear whether Colombia's fragile fiscal situation would allow it to pass the review. Colombia's spreads to comparable U.S. debt have widened some 100 basis points to nearly 400 bps over the past 12 months, sharply underperforming regional peers Chile and Peru. Its $3.8-billion offering this month yielded a 7.5% coupon on the five-year debt and 8.75% for 10-year, both considered high. Colombia's midterm fiscal framework, a roadmap for the country's indebtedness for this year and next, must be published by the government by mid-June.
Reuters
21-03-2025
- Business
- Reuters
Colombia incoming finance minister says will continue to tackle debt, tax collection
BOGOTA, March 21 (Reuters) - Colombia's incoming finance minister German Avila said on Friday that under his term the country would continue to pay back its pubic debt and look to improve tax collection in order to address the government's tight fiscal situation. Avila is set to replace former minister Diego Guevara, who resigned earlier this week amid disagreements with President Gustavo Petro, causing unease in the Latin American nation's financial markets. "We will continue to meet the commitments of the public debt and we will make the necessary adjustments to improve tax revenues that will allow us to meet the fiscal tightness of this juncture," Avila said in an audio file shared with local media. "Such appointments should not jolt the health of the country's economy," he added. "To the contrary, the good results should continue and get consolidated." Avila is the fourth finance minister Petro has appointed since he began his administration in August 2022. Analysts have said the change of minister highlights uncertainty around the future of Colombia public finance, with lack of public funds forcing the country to slash spending plans and raise its debt issuance cap. "We owe ourselves a government and a program inclined to meet social needs, which implies listening to and attending to all the sectors that make up the nation," Avila said.
