major macro economic indicators
|GDP growth (%)||3.0||2.0||1.8||2.6|
|Inflation (yearly average, %)||5.0||7.5||4.3||3.3|
|Budget balance (% GDP)||-3.4||-2.3||-2.7||-2.2|
|Current account balance (% GDP)||-6.4||-4.3||-3.3||-2.9|
|Public debt (% GDP)||51.2||51.9||52.3||53.0|
- Ports on two oceans
- Large population (almost 50 million)
- Plentiful natural resources (coffee, oil and gas, coal, gold)
- Significant tourism potential
- Cautious economic policies reinforced by the OECD membership
- Institutional stability
- Healthy banking system
- Sensitivity to raw material price movement and the US economic situation
- Shortcomings in road and port infrastructures
- Problematic security situation due to drug trafficking
- Relatively undiversified economy
- Size of the informal sector (60% of jobs)
- Shortages of skilled labour and poor productivity
- Cumbersome legislative, judicial and administrative systems; corruption
- Structural unemployment, poverty and inequality, deficient educational and health care systems
Upturn in growth in 2018 but remaining below potential
Following two years of weak growth, economic activity has been picking up again in 2018. The stabilized inflation, fallen below the target level set by the central bank (2-4%), should enable the bank to maintain its rather expansive monetary policy (key lending rate at 4.25% at end July 2018). This should help to stimulate household consumption and corporate investment, both of which are also benefiting from reduced political uncertainties linked to elections, and, for the latter, from the rise in oil prices. An increase in public expenditure – by municipalities and governorates in particular – is also expected to further add to growth. However, despite the extensive road construction programme using the public-private partnership "Cuarta Generación de Concesiones viales" (2012-2035) aimed at catching up on transport infrastructure, and the latest public investment-enhancing programme Colombia Repunta (2017-2018), construction activity is struggling to get back on track. This is weighing on construction materials. Food, automotive, and household chemical produts are benefiting from vivid consumption. Services, such as retail trade, transport, accommodation, and restoration are also doing well. The trade balance is not expected to make any contribution to growth, as the increase in coffee (volume and price) and oil (price) exports will not compensate for the increase in imports (strength of domestic demand). Moreover, the economy is still growing at a rate below its potential (estimated by the IMF at 3%), still far from its pre-2015 performances.
Public and external accounts that benefit from rising oil prices
The 2016 tax reforms (VAT raised from 16% to 19%, extension of the tax base, simplification of the tax regime) are beginning to bear fruit, resulting in increased receipts and a reduction in the deficit. This is compounded by the increased rate of growth in 2018 and higher oil revenues (0.6% of GDP). From 2019 onwards, the deficit reduction, combined with the economic recovery and stabilisation of the interest burden (2.9% of GDP and 16% of public expenditure in 2018), should make it possible to stop the increase in the public debt.
In terms of the external account, both the recovery in oil prices and the increase in other exports, as well as tourism, should further reduce the trade deficit in goods and services (2.8% of GDP in 2017), despite the rise in imports of capital and consumer goods. The increase in remittances from expatriate workers (2.1% of GDP), boosted by the relatively positive conditions in the United States, will be balanced by the rise in repatriated dividends by foreign companies (2.6%) driven by the increase in their profits. The current account deficit should therefore be reduced. It will remain financed by foreign direct investments (3.2% of GDP in 2017), which continue to increase foreign exchange reserves (currently more than one year of imports and 2.5 times the short-term external debt). Total external debt represents 40% of GDP, 15% of which is its public share. This relatively favourable situation, reinforced in May 2018 by the two-year renewal of the IMF's precautionary line of credit (USD 11.4 billion), has largely contributed to the Colombian peso's resistance against the US dollar since the beginning of 2018.
Problematic implementation of the Peace Agreement and its transitional justice
Ivan Duque of the Centro Democratico party (centre-right) won the second round of the presidential elections in June 2018 (54% of the vote) against left-wing candidate Gustavo Petro (42%), a former guerrilla. Although his party does not have an absolute majority, Mr Duque will be able to command right-wing majorities in both houses of Congress when his party takes office on the 7th August. Like his predecessor, he will have to deal with the arrival of Venezuelan refugees (already more than a million in border regions), the revitalization of the economy and fiscal consolidation, and the implementation of the peace agreement with the FARC, adopted by Congress in late 2016. During his campaign, Mr Duque pledged to change the peace agreement by increasing reparations for victims, by demanding that FARC leaders convicted by the Jurisdicciόn Especial para la Paz (JEP) be ineligible to the ten parliamentary seats reserved for candidates of the new FARC party (Fuerza Alternativa Revolucionaria del Comun), and by suppressing the amnesty for drug traffic for political purposes. However, any such changes would likely be subject to further negotiation, voting and approval by the Constitutional Court, which must already rule on the law governing the JEP. For its part, the opposing party complains of delays in the social reintegration of combatants, the lack of redistribution of land, the lack of redesign of the rural cadastre and multiple murders of its local officials. In addition, armed groups are violently trying to regain control of the drug traffic, which as surged after being abandoned by the FARC. This could lead the Colombian authorities (under pressure from the United States) to resume aerial eradication with glyphosate, at the risk of alienating local communities. Furthermore, a thousand FARC dissidents have reportedly not surrendered their weapons and are suspected of committing further crimes as well. Negotiations with the ELN, the other guerrilla movement that is carrying out violent actions, remain laborious.
Last update : July 2018
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.