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“A
Positive View of Colombia”
Por
Andrés Arias
Introduction
Colombia
has never defaulted on its debt and will continue
to honor its obligations. No matter what, our
reputation in international financial markets
will be preserved because such reputation is a
critical component of our nation’s wealth.
Despite the value of reputation in international
financial markets, in the last few weeks market
sentiment towards Colombian sovereign debt has
been hostile, to say the least. An increase in
risk aversion towards financial claims on the
Colombian government has induced a plunge of sovereign
bonds’ prices and a rise in yields that has made
external financial markets prohibitive or virtually
closed to the new administration.
Despite the value of reputation in international
financial markets, in the last few weeks market
sentiment towards Colombian sovereign debt has
been hostile, to say the least. An increase in
risk aversion towards financial claims on the
Colombian government has induced a plunge of sovereign
bonds’ prices and a rise in yields that has made
external financial markets prohibitive or virtually
closed to the new administration, even if the
government’s financing scenario for next year
is tight, our reputation in international financial
markets will be preserved and debts will be honored
because alternative sources of funds are at hand.
Furthermore, there is clear
evidence that Colombia still exhibits a solid
financial, monetary and balance of payments system
relative to other Latin American economies that
have already collapsed (Argentina, Uruguay) or
that seem financially fragile (Brazil). This has
guaranteed sufficient insulation against any possibility
of contagion from recent crises in the region
and should also protect the economy from the effects
that could stem from a potential collapse in other
Latin American economies.
EXPOSURE OF THE PUBLIC SECTOR TO CAPITAL FLIGHTS
Furthermore, there is clear evidence that Colombia
still exhibits a solid financial, monetary and
balance of payments system relative to other Latin
American economies that have already collapsed
(Argentina, Uruguay) or that seem financially
fragile (Brazil). This has guaranteed sufficient
insulation against any possibility of contagion
from recent crises in the region and should also
protect the economy from the effects that could
stem from a potential collapse in other Latin
American economies.
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