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Bogota: Colombia in the Eyes of Wall Street

June 28, 2007


A week after it was announced that Colombia’s first quarter economic performance surpassed expectations, the Americas Society and Council of the Americas (AS/COA) brought together over 900 private and public sector leaders to analyze the country’s economic prospects. The eleventh Bogotá City Conference, hosted in association with the Asociación de Instituciones Financieras (ANIF) and Fundación para la Educación Superior y el Desarrollo (FEDESARROLLO), focused on key fiscal and macroeconomic issues, as well as challenges to Colombia’s economic success.

"Colombia in the Eyes of Wall Street" featured several keynote speakers along with one panel.

Keynote speakers included:

  • Oscar Iván Zuluaga, Minister of Finance
  • Andrés Uriel Gallego, Minister of Transportation
  • Camilo Reyes, Vice Minister of Foreign Affairs
  • Sergio Clavijo, President, ANIF
  • Milton Drucker, Charge d’Affaires, U.S. Embassy in Colombia
  • Julio Torres, Director of Public Credit, Ministry of Finance
  • Mauricio Santa María, Deputy Director, FEDESARROLLO

Conference panelists included:

  • Alessandra Alecci, Vice President and Senior Analyst, Moody’s Investor Services
  • Cristián Moreno, Head of Latin American Equity Research, Santander Group
  • Luis Oganes, Managing Director and Co-head, Latin America, Emerging Markets Research Group, JPMorgan Chase & Co. 

 The Bogotá City Conference is part of the AS/COA’s signature 2007 Latin American Cities Conferences. This summary provides an overview of the main themes addressed.


The Bogota City Conference focused on the improved economic situation, development of the capital market, and prospects for trade. Prominent government ministers and private sector analysts offered participants first-hand analyses of the country’s economic and financial outlook, including future opportunities and challenges.

 Economic and Financial Outlook

Most analysts agreed that the Colombian economy is strong. Improving steadily over the last four years, the gross domestic product (GDP) growth rate reached 6.8 percent in 2006. This rise is expected to continue, with forecasts predicting growth between six and seven percent for 2007. Investment has also increased since 2002, jumping from 14 percent of GDP to 27 percent in 2006. However, analysts warned that maintaining the current growth levels will be a challenge.

Increased confidence in Colombia’s economy attracts investors from abroad and stimulates growth. Julio Torres noted that Colombia increasingly serves as a primary foreign investment destination in Latin America. Security, macroeconomic stability, and institutional strength—three important pillars for sustaining long-term growth—have boosted investment and private consumption, said Torres.

A positive economic outlook is also good news for the country’s labor market. According to Mauricio Santa-María, increased development in industry, construction and commerce has spurred economic growth. "This is good news for the country," said Santa-María, who explained that these sectors employ 70 percent of Colombia’s skilled labor force and 80 percent of its non-skilled labor force.

On the fiscal front, speakers recognized that the government has launched significant initiatives to reduce the debt and boost revenue. However, budget restrictions and high government operating costs impede public spending cuts and implementation of countercyclical fiscal policies.

 Development of a Strong Capital Market

Colombia’s capital market is reasonably well valued and has good liquidity, said international analysts. Still, the market is small and concentrated among only a few companies and stockholders. Compared to other Latin American countries, the size of Colombia’s capital market as a percentage of its GDP (24 percent) is behind that of Chile (97 percent), Argentina (48 percent), Brazil (47 percent), and Mexico (27 percent).

An increased number of initial public offerings could counteract this weakness. Cristián Moreno noted that Bogotá’s recent decision to sell ECOPETROL—the country’s main petroleum company—serves as a significant initial step. The government could also improve the environment for foreign investment by adopting clearer standards and international corporate governance practices. Brazil’s Novo Mercado was mentioned as a good example of such practices. According to Moreno, a well-developed capital market would provide a source for project funding and a catalyst for wider economic growth.

Colombia’s Image Abroad and Foreign Trade

In recent years, Colombia has implemented a number of economic, political, and social reforms to improve its international image. Murder and kidnapping rates have sharply declined. The surge in foreign investment is a testament to Colombia’s success in providing a more secure business environment.

A renewed focus on institution-building has helped to improve security. According to U.S. Ambassador Milton Drucker, the Colombian government, in collaboration with the United States, is also focused on strengthening the judicial system. "The new Colombia has accepted the transition to a revamped judicial system that offers expeditious trials and transparency, and reaches higher standards for social justice," said Drucker. While there is still room for progress, public officials have agreed to reform the judicial branch to decrease opportunities for corruption.

On the trade front, Vice Minister of Foreign Affairs Camilo Reyes emphasized Colombia’s desire to finalize a trade deal with the United States. The one sticking point rests wit U.S. Congress. He also noted that Colombia seeks to develop new markets and pursue trade agreements with South and Central American countries, the European Union and Asia-Pacific Economic Cooperation (APEC) members.