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COLOMBIA.

COLOMBIA
 % Change

 Interest
Date CPI M1 Rate (%)

 1990 32.4 27.9 31.0
 1991 26.8 34.1 29.7
 1992 25.1 41.8 27.0
 1993 22.6 25.0 26.7
 1994 22.6 26.7 37.4
 1995 19.5 19.7 32.4
 1996 21.6 16.2 27.5
 1997 17.7 23.6 23.8
 1998 16.7 -12.4 34.0

 1999 9.2 19.9 15.4
Jan 1.3 -9.9 10.6
Feb 2.3 -10.2 10.4
Mar 0.9 -7.7 23.7
Apr 0.8 -18.9 20.2
May 0.5 1.3 18.5
Jun 0.3 4.0 19.1
Jul 0.3 4.2 20.2
Aug 0.5 6.8 20.1
Sep 0.5 8.3 18.3
Oct 0.5 0.5 18.2
Nov 0.5 2.7 17.1
Dec 0.5 19.9 15.4

 2000 8.8 10.0 13.3
Jan 1.3 -9.9 10.6
Feb 2.3 -10.2 10.4
Mar 1.7 -11.4 11.3
Apr 1.0 -7.1 11.6
May 0.5 -3.2 12.0
Jun 0.2 14.7 12.0
Jul 0.3 34.8 12.3
Aug 0.3 14.6 12.9
Sep 0.4 -19.2 13.0
Oct 0.1 -18.0 13.3
Nov 0.3 -9.3 13.2
Dec 0.5 10.0 13.3

 2001 9.0 12.0 15.0
Jan 1.0 -11.1 13.4
Feb 1.9 -15.8 13.2
Mar
Column
Number [1] [2] [3]

 (In millions US $)

 Current
Date Imports Exports Trade Bal Acct Bal

 1990 3,754.0 4,620.0 866.0 510.0
 1991 4,428.0 5,488.0 1,060.0 2,339.0
 1992 5,718.0 4,941.0 -777.0 678.0
 1993 6,816.0 4,163.0 -2,653.0 -905.0
 1994 11,474.0 9,290.0 -2,184.0 -2,800.0
 1995 11,330.0 8,997.0 -2,333.0 -2,300.0
 1996 12,787.0 10,574.0 -2,213.0 -3,956.0
 1997 14,041.0 11,648.0 -2,393.0 -4,715.0
 1998 12,933.0 8,744.0 -4,219.0 -5,800.0

 1999 10,658.0 11,575.0 916.0 -2,062.0
Jan 779.0 712.0 -67.0 -
Feb 1,613.0 1,475.0 -138.0 -
Mar 2,506.0 2,421.0 -85.0 -
Apr 3,384.0 3,253.0 -131.0 -
May 4,170.0 4,179.0 9.0 -
Jun 5,063.0 5,218.0 155.0 -
Jul 5,975.0 6,237.0 262.0 -
Aug 6,763.0 7,237.0 474.0 -
Sep 7,657.0 8,298.0 641.0 -
Oct 8,582.0 9,263.0 681.0 -
Nov 9,628.0 10.332.0 704.0 -
Dec 10,658.0 11,575.0 916.0 -2,062.0

 2000 11,538.0 13,043.0 1,505.0 -1,965.0
Jan 544.0 1,014.0 470.0 -
Feb 1,710.0 2,074.0 364.0 -
Mar 2,789.0 3,136.0 347.0 -
Apr 3,657.0 4,033.0 376.0 -
May 4,707.0 5,755.0 1,048.0 -
Jun 5,675.0 6,306.0 631.0 -936.0
Jul 6,542.0 7,423.0 881.0 -
Aug 7,567.0 8,618.0 1,051.0 -
Sep 8,556.0 9,717.0 1,161.0 1,532.0
Oct 9,517.0 10,925.0 1,408.0 -1,735.0
Nov 10,544.0 11,911.0 1,367.0 -1,869.0
Dec 11,538.0 13,043.0 1,505.0 -1,965.0

 2001 13,000.0 14,500.0 1,500.0 -1,500.0
Jan 1,004.0 -57.0
Feb -347.0
Mar
Column
Number [4] [5] [6] [7]

 (In mil-
 lions US
 $)

 Net Exchange
Date Reserves Rate

 1990 4,501.0 568.7
 1991 6,420.0 706.9
 1992 7,767.0 811.8
 1993 7,869.0 917.3
 1994 8,049.0 831.3
 1995 8,323.0 987.2
 1996 9,897.0 980.0
 1997 9,881.0 1,293.6
 1998 8,694.0 1,528.3

 1999 8,144.0 1,896.0
Jan 8,153.0 1,949.5
Feb 8,216.0 1,948.1
Mar 8,768.0 1,955.1
Apr 8,751.0 1,603.9
May 8,758.0 1,672.0
Jun 8,500.0 1,741.0
Jul 8,328.0 1,800.8
Aug 8,327.0 1,969.8
Sep 7,881.0 2,003.8
Oct 7,907.0 1,966.5
Nov 7,883.0 1,922.5
Dec 8,144.0 1,896.0

 2000 8,832.0 2,196.8
Jan 8,153.0 1,949.5
Feb 8,216.0 1,948.1
Mar 8,209.0 1,955.1
Apr 8,333.0 1,988.7
May 8,351.0 2,084.9
Jun 8,367.0 2,136.2
Jul 8,598.0 2,175.0
Aug 8,484.0 2,204.2
Sep 8,611.0 2,216.9
Oct 8,730.0 2,147.9
Nov 8,164.0 2,169.8
Dec 8,832.0 2,196.8

 2001 8,500.0 2,400.0
Jan 8,878.0 2,240.8
Feb 9,090.0 2,257.5
Mar 2,303.9
Column
Number [8] [9]

FOOTNOTES BY COLUMN: Annual figures for 2001 are projections.
[1-2]: Annual figures represent January-December increase.
[3]: Rate on 90-day CDs. Annual figures represent average for year.
[4-6]: Trade figures show imports and exports on a balance of payments
basis and are accumulated monthly. [7]: Current account figures are
accumulated monthly. [4-9]: Annual figures represent values at year-end.

SOURCES BY COLUMN: 1: Dane. 2-9: Banco de la Republica.


FINANCIAL OUTLOOK

* Inflation looks likely to end the year at 9%, though it could descend to the government's target of 8% if unemployment remains high and the recession continues to squelch demand. The central bank is predicting 7.6% for 2001 and G.9% for 2002. Other issues threatening inflation targets include public-service rate hikes, particularly in the energy sphere where subsidies for low-income families are being phased out. In addition, power rates are rising because of guerrilla attacks on the energy grid. Another negative factor will be the steep tax hikes projected for Bogota, where property taxes may rise 40% or more this year. The proposed tax increases have been attacked by the building industry, which warns that higher taxes may stunt recovery of the construction sector, which has been in the doldrums for three years.

* Interest rates, which now range around 13% on an annual basis, may rise moderately in the second half. In a bid to revive the economy, the central bank lowered its interest rates 0.5% this year in view of the previous downward trend for inflation. However, the bank continues to come under fire for giving priority to inflation control over growth stimulation. Most economists argue that, with record unemployment and a worsening guerrilla war, a moderate increase in inflation would be preferable to yet more stagnation. Banking sector losses continue to be heavy, though they fell 65% year-on-year in January-February, from about $7.7 million to some $2.6 million. A number of major banks are capitalizing to maintain their positions in the hope that the situation will improve medium-term as the economy finally takes off. Insurance companies have also been in the doldrums, but as much because of spiraling crime and guerrilla violence as from the recession.

* The trade surplus edged above $1.5 billion in 2000 and will likely stay at similar levels for 2001. Imports in 2000 rose only 8.3% as a result of the ongoing slowdown, while exports climbed nearly 13% as companies turned to foreign markets to compensate for weak markets at home. High world oil prices and a favorable exchange rate also helped boost export earnings. But coffee prices plunged disastrously due to saturation of world markets, and no real improvement is expected this year. In the next two years, African palm acreage will be increased sharply to boost export earnings from this crop and soften the blow from depressed coffee prices.

* Reserves remain stable and should continue to top $8 billion by the end of the year.

* The peso may fall to Ps.2,400:$1 if the guerrilla war worsens and troubles continue to plague the economies in Argentina and other countries in the region. Depreciation in the first quarter was running around 16% on an annual basis. In early April, the peso hit a new low of Ps.2314:$1 in response to US stock market jitters and general low demand. Also in early April, a $750 million sovereign bond issue guaranteed by the World Bank set off additional fears that the peso might sink further. However, the ANIF finance institution association predicts that annual depreciation will total just 8% for 2001. Other analysts predict that it could be significantly higher because of the security situation. As much as $ 5 billion is estimated to have left the country during the last three years in the wake of the emigration of thousands of executives, fearful for their future.

ECONOMY MONITOR

* Growth Outlook: The government continues to hope for 4.1% growth this year, but private forecasters are sticking with lower figures ranging from 2.8% to 3%. The prestigious Fedesarrollo think tank has warned that the economy's recovery is by no means assured short-term. It points to last August, when industry was growing at an annual rate of some 14%. But by January the figure had shrunk to only 4%. If the trend continues, it warns the economy may not even grow the 3% some forecasters are predicting for 2001.

* Political Factors: Peace talks with the FARC and ELN guerrillas remain bogged down by procedural problems. The government is moving ahead with plans for a demilitarized zone for the ELN that could be used as a staging ground for peace talks - similar to a larger area in the south ceded to the FARC. The last of 3,000 government troops withdrew in early April from the ELN demilitarized areas, and the ELN agreed to resume talks broken off in March. Authorities may have to start rationing electric power as rebel raids on the energy grid continue. Though an estimated 800,000 or more managerial-level workers have fled the country due to violence, oil and mining companies are holding on but growing ever more cautious as the guerrillas extend their grip. In the cities, however, international store chains, insurance companies and hoteliers continue to invest because the government retains control over urban zones. The late March summit meeting between President Andres Pastrana and President Hugo Chavez of Venezuela yielded vague commitments to work together to end violence in Colombia, but few concrete steps were announced for healing the tense relations between the two countries.

* Fiscal Situation: The government hopes to reduce this year's fiscal deficit to some 2.8% of GDP - a target that looks attainable but at the expense of early economic recovery. Fedesarrollo argues that the government should reduce the fiscal deficit by cutting expenditures rather than blunting recovery with new taxes. Most analysts agree that recovery will be a slow process because of external factors (such as the expected drop in oil prices) and the lack of investor confidence at home, where the ongoing security problems continue to threaten business and livelihood. In early April, however, the government sold $750 million in bonds guaranteed by the World Bank and managed by Merrill Lynch. Total needs for the year are estimated at $2.3-$2.4 billion. After a recent review, the IMF has given Colombia permission to draw up to $2.7 billion from its Extended Fund Facility. By end-2002 the fiscal deficit should be down to 1.5% of GDP under the terms of the government's agreement with the IMF.

* Major Sectors: Oil earnings may shrink this year as world prices come off last year's highs. Falling output and guerrilla raids on pipelines will also be a factor. Government oil company Ecopetrol reported record profits of Ps. 1.16 trillion for 2000. Coffee will likely remain in the doldrums, given that world markets remain saturated. Coal exports should bring in at least $750 million provided insurgents do not paralyze export outlets to the coast. Flower exports should bring in $500 million, while ferronickel export earnings should top $150 million. Overall, industry is recuperating. The ANIF association of financial institutions forecasts that industrial activity should rise nearly 5% this year, while the commerce and the hotel sectors should expand at least 4%. Last year industry grew 9.6%, with the biggest hikes in iron and steel, transportation, machinery and textiles. However, activity was so low for so long that much of last year's apparent recovery amounts to little more than making up for lost ground. The construction sector is also beginning to recover. Licensing approvals grew 66.4% year-on-year in January, though some of that activity may be due to builders seeking to have approvals before local governments change. Auto sales remain slack, rising only 2.4% year-on-year in January-February. The agricultural sector may grow as much as 4.4% this year, according to an ANIF forecast.

* Other Sectors: The finance sector's accumulated losses for 2000 totaled nearly $670 million, though this figure was a distinct improvement from 1999, when the recession was at its height. Insurance companies have also been in the doldrums, but as much from spiraling crime and guerrilla violence as from the recession.

* Employment: Unemployment is at 19.6%, below the earlier high of 20.4% but still among the region's highest and far above February 2000 figures of 16.7%.

* Stock Market And Investment: After months of depression, shares are reviving as company profits and dividends rise. The Bogota share index soared some 17% in the first quarter. The bullish market is now cooling, but is expected to remain fairly active for some time because many shares were grossly undervalued. The central bank's decision to reduce interest rates to spark the economy has also boosted share values. Hopes are running high that the planned July merger of Colombia's three small stock exchanges (Bogota, Medellin and Cali) will cut operating costs and boost activity, but critics maintain owners of big companies must let more shares float before activity will truly heat up. Despite the security situation, foreign investment approvals in the first three-quarters of last year rose 28% to $1.924 billion. Still, this is a far cry from $3.5 billion in 1997, when the government's privatization program was at its height. Transport, communications and the finance industry were the chief beneficiaries. But on the stock exchange, foreign investment fund share holdings dropped 24.1% to $418 million year-on-year in January-February 2001, in part because of poor share yields.

COMPANY MONITORING

* The Santa Marta port authority has unveiled blueprints for construction of a $2.3-billion Colombo-Brazilian steel plant in the city.

* The Coltabaco group has announced a $100 million investment plan that includes construction of an $80-million paper plant by Colombiana Kimberly Colpapel.

* The Cadenalco store chain plans to invest nearly $60 million in expansion projects this year.

* Hoteles Estelar acquired a 48% stake in the Cartagena Hilton hotel.

* AT&T bought communications company FirstCom Colombia in a $26-million investment program.

* The recession has forced Distral, one of Colombia's largest engineering groups, into bankruptcy.

* French group Danone plans to boost its 20% holding in Compania de Galletas Noel to 30%.
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Title Annotation:economic aspects
Publication:America's Insider
Geographic Code:3COLO
Date:Apr 30, 2001
Words:2668
Previous Article:CHILE.
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