major macro economic indicators
|GDP growth (%)||4.9||4.4||3.1||2.6|
|Inflation (yearly average) (%)||2.0||2.9||5.0||7.3|
|Budget balance (% GDP)||-0.8||-1.7||-2.8||-3.1|
|Current account balance (% GDP)||-3.3||-5.2||-6.5||-6.0|
|Public debt (% GDP)||37.7||44.2||49.3||49.3|
(e) Estimate (f) Forecast
- Access to two oceans
- Large population (nearly 50 million)
- Abundant natural resources (agricultural and mineral)
- Considerable tourism potential
- Prudent economic policy
- Institutional stability
- Sound banking system
- Sensitive to raw materials prices and the American economic cycle
- Road and port infrastructure deficiencies
- Problematic security situation linked to drug trafficking
- Educational and healthcare shortcomings
- Large informal sector (60% of jobs)
- Lack of skilled labour and low productivity
- Legislative, judicial and administrative delays, corruption
- Structural unemployment, poverty and inequality
Slowdown in activity in 2016
In 2016, activity is expected to suffer again from the weakness in commodity prices, oil prices in particular, and the slowdown in private consumption. The country's economic performances are effectively closely tied to hydrocarbon exports (nearly 50% of the country’s exports) and to a lesser extent mining and agricultural activity. The weak price of hydrocarbons, which generates about a third of state revenues, is likely to curtail public investment while household consumption is affected by the rising inflation and unemployment that affects their purchasing power.
Private investment primarily intended for the energy sector is expected to remain sluggish due to weak oil prices and rates hikes by the central bank for ten times, after the increase decided in September 2015. The increase in production capacity of the largest refinery of the country should however help to increase industrial production. The tourism sector is also expected to benefit from progress on the peace deal with the FARC.
Inflation is expected to increase, particularly affected by rising food prices due to the drought that has gripped the country in the first half of this year, caused by El Nino.
Budget and current account deficits still large
The public deficit deepened in 2015, hit by the fall in oil prices, which represent almost a third of State income. This trend is set to continue in 2016 due to the persistent weak of hydrocarbon prices.
Despite an expected reduction in investment spending, the anticipated increase in current spending because of higher transfers to the regional governments, stipulated under the constitution, is likely to reduce the central government's room for manoeuvre. Colombia, with a reputation for fiscal rigour and an orthodox economic policy, is committed to respecting the law on budgetary equilibrium adopted in 2011, which provides for the return of the central government's structural deficit to 1% of GDP by 2022. The plan to abolish net worth tax and the financial transactions tax, which had been postponed to 2018-2019, could, therefore, be cancelled.
Regarding foreign trade, the current account deficit is expected to decline thanks to the reduction in imports of consumer goods, affected by the depreciation of the local currency. Imports of oil derivatives are also expected to reduce given the increase in production of the refinery Refica (in Cartagena). However, oil exports should remain low affected by both lower prices and lower US demand. Exports of minerals, especially coal are also affected by the weak prices.
Important advances in peace negotiations with the FARC
On June 2016, the Colombian government and the Revolutionary Armed Forces (FARC) took a further step in the peace process with the signing of a historic ceasefire and disarmament agreement of the rebellion. This is an important step in the negotiations initiated by President Santos since 2012. This agreement will be subject to approval of the people through a plebiscite scheduled for this fall.
The desire of both sides to put an end to the conflict bodes well and is a major step forward for Colombia. The Colombian authorities are talking of a peace deal being signed in March 2016 and believe that an improvement in the security climate could have a positive impact on the economy of somewhere between 1 and 2% of GDP. A positive outcome to the peace talks does not mean that Colombia will be free of its internal problems such as drug trafficking and crime. The guerrillas are only indirectly linked to drug trafficking and to the drug traffickers and emerging criminal bands (BACRIM), which are also involved in the trafficking of narcotics. In the long term, however, the peace deal should strengthen the institutional framework, help boost investment and the country's social development.
Last update : July 2016
The Colombian laws that talk about payment guaranty have been developed under general guideline known as “Proyecto INTAL” which is LATAM based. It has been slightly modified, taking into account orientation of AngloSaxon system of general law of Geneva 1930.
The rules of securities in Colombia, ruled under title II of decret 410 of March 27 1971 became effective in January 1/ 1972 known as “Codigo de Comercio”.
The invoice is the security tittle which is most frequently used as main for debt collection inColombia. In event of default, as long as invoices contain all law regulations it should be effective for Collection. In case of refusal payment from debtor is mandatory original invoice to legal processes.
When a sale has been done the seller ought to issue one original invoice and two copies. The original one must be kept by the seller to be used for legal issues, other copy handed to buyer and the other is used for accounting record.
Other securities that could be used are bill of exchange, Check, promissory note, payment agreement, bond, bill of landing, or waybill. By invoices or any other security an executor procedure can be started by lawsuit before a judge who issues a writ of execution. Then debtor is notified, if the debtor refuses to pay up the court officer will issue a property order attachment, this order can also be executed on vehicles, bank accounts, shares or some contracts.
For transactions of high value, payments are made through a national interbank network called SEBRA (Electronic bank of the republic) It uses a system of real time settlement. SEBRA turns use two systems CEDEC (Check Clearing System) and CENIT (National Electronic interbank compensation.). For low payments cash and check are used primarily, although the use of electronic payments has had high growth in recent years.
Recovery for the extra-judicial form begins with telephone contact to the debtor, along with sending a letter by e-mail or certificated mail, we request the payment of the debt immediately. In this first phase we indicate to the debtor that if he pays in this moment he will be saving the penalty interest, charges and legal fees.
In this instance we get the payment of the debt or else the signing of a settlement agreement, which is best option considering the cost and complexity of the legal Colombian system.
If debtor is not contacted by telephone or written, we review the feasibility of a visit to the debtors address in order to verify the physical condition of his company and initiate the study of a legal process if the payment is refused.
When debtor does not make the payment of the debt, we do the study of the securities, estates, bank accounts of the debtor or his co-debtors, legal budges study, and judicial history of the debtor.
The case is submitted to the attorney who is responsible for establishing the executive process making a seizure of property prior to the notice of demand.
For the application of the demand, the lawyer is responsible for delivering the judge all the facts and documents justifying the debt, which then the debtor will be required to conciliation. In these processes the defendant may appeal and for that reason the process is long and costly in Colombia.
The code of civil procedure, in the third book rules the presentation of claims classifying them according to minimum account, lowest amount and highest amount. According to that classification it designates the instance that is going to handle the claim.
In case of insolvency or bankruptcy, the process must be filed with the “Superintendencia de Sociedades”with the requirements of the law 1116 of 2006, who ought to assign the case to an agent or liquidator according to the situation of the debtor company.