Colombia-Foreign Debt

Colombia's debt situation, unlike that of much of the developing world, was manageable in the late 1980s. Conservative borrowing strategies and a strong reserve position in the late 1970s had provided Colombia with the necessary cushion to minimize international borrowing in the early 1980s. A willingness to refrain from adopting a rescheduling strategy ensured Colombia's continued good standing in the international lending community. The country preferred instead to incur the cost of slightly higher interest rates in order to maintain its credit worthiness.

As of 1988, Colombia's credit standing was still the best among the major debtor nations in Latin America. Colombia was the only Latin American country to be offered loans from private banks voluntarily and was able to draw down debt accounts from the World Bank and other public sources without major interference from the International Monetary Fund (see Glossary). Colombia's outstanding debt, however, was rising in real terms, and there was concern among lending agencies that it would eventually reach a level incompatible with the government's conservative strategy (see table 13, Appendix).

As of December 1986, Colombia's total external debt, including private and public commitments, amounted to US$14.6 billion, or more than double its obligations in 1980. Although this represented less than 4 percent of total debt outstanding in Latin America, Colombia's debt service obligation, which included interest and principal for all loans, more than tripled over the same period, indicating the growing burden of these foreign loans.

Colombia's debt service burden grew from 9 percent of exports in 1980 to 27.6 percent in 1986. Although this was not out of line for debtor nations in general, it raised the issue of Colombia's increasing debt problem and supported the policymakers' goal of continuing diversification efforts and attracting foreign investment rather than relying on increased borrowing to finance the economy's future.

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An abundance of material exists relating to the Colombian economy, of which William Paul McGreevey's An Economic History of Colombia, 1845-1930 still provides an unparalleled historical background. More recent works on general macroeconomic topics include Economic Policy and Income Distribution in Colombia, edited by by R. Albert Berry and Ronald Soligo, and Miguel Urrutia's Winners and Losers in Colombia's Economic Growth of the 1970s. Charles W. Bergquist's essay on the Colombian labor movement in his book Labor in Latin America is among the best integrated treatments of the subject. A broad discussion of the relationship between Colombian politics and economics may be found in The Politics of Colombia by Richard H. Dix. Richard M. Bird's study, Intergovernmental Finance in Colombia, gives complete coverage of the government's role in the national economy. The Economist Intelligence Unit's annual Country Profile: Colombia provides current summaries and statistical tables on all aspects of economic production and trade. The Banco de la República's statistical department produces ample data on Colombia's domestic and foreign economic activities. The Plan de Economía Social, Agosto 1987 of the National Planning Department (Departamento Nacional de Paleación) is an invaluable source of supporting data and current economic policy directions. (For further information and complete citations, see Bibliography.)

Data as of December 1988