Announcement of Colombia Consultative Group Meeting on July 6, 1979

. . FOR IMMEDIATE RELEASE 9Yi ~ eWorldBank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A.• Telephone: (202) 477-1234 BANK NEWS RELEASE JULY 6, 1979 COLOMBIA CONSULTATIVE GROUP MEETING The following announcement was issued on July 5, 1979, at the World Bank's European Office in Paris. The tenth meeting of the consultative group for Colombia, sponsored by the World Bank, was held in Paris on July 4 and 5, 1979. The main purpose of the meeting was to facilitate the flow of external capital resources in support of Colombia'$ economic development efforts. The Delegation of the Government of Colombia included Dr. Jaime Garcfa Parra, Minister of Finance and head of the delegation, Dr. Alberto V~squez Restrepo, Minister of Mines and Energy, Dr. Eduardo Wiesner Duran, Chief of Planning and Dr. Rafael Gama, General Manager of the Central Bank. The meeting was conducted under the chairmanship of Dr. • Nicolas Ardito-Barletta, World Bank Vice President for Latin America and the Caribbean. Representatives of the Governments of Austria, Belgium, Canada, Denmark, France, Germany, Italy, Japan, Netherlands, Spain, United Kingdom and the United States attended the meeting. Representatives of the International Mone- tary Fund, the Inter-American Development Bank, the International Finance Corporation and the United Nations Development Programme, were in attendance. The Organisation for Economic Co-operation and Development was also represented. The group discussed Colombia's economic situation and prospects on the basis of a report prepared by the World Bank and reviewed the country's needs for external financing during 1979-82 in 1 ight of a list of projects submitted by the Colombian authorities. In his address to the meeting, Minister Garcfa Parra reviewed developments in the economy over the past three decades and outlined the country's short- and medium-term economic prospects. He recounted the advances made in terms of welfare since 1950, and noted that a significant transformation occurred in the economy beginning in the mid-1960's. The most significant of the changes that occurred during this period were the alleviation of the foreign exchange con- straint, which had plagued the economy for many years--through the successful promotion of non-coffee exports, the reduction in the rate of population growth and the acceleration of the rate of economic growth. These changes according to the minister, have led to more rapid growth of per capita income 9 higher • employment levels and improved well-being of all Colombians. Most notably, also, is the fact that these advances were made under a political regime representing a long tradition of democracy. • •• I  - 2 - Mintster Garc(a Parra, after reviewing the strong economic growth achieved ~ in 1978, stated his belief that similar advances were possible in the future to achieve these goals. The government has prepared a "plan for national integra- tion" to take advantage of the regional comparative advantages existing in the country. He mentioned that the physical infrastructure projects, which consti- tute a large proportion of the government's investment program designed to exe- cute this plan carry with them social benefits. Referring to future economic prospects, he noted that, despite its large foreign exchange holding, the coun- try would need large amounts of foreign capital to supplement domestic savings in support of the expanded public sector investment program. He pointed out that several measures had been taken to increase public and private savings, and that these were having favorable effects. Among these, he singled out policy in the oil sector during the past year which was providing additional financial resources and conserving energy use. He noted that the government was taking actions to maintain internal economic stability and at the same time promote growth. These actions included opening the economy to expanded foreign trade. The minister ended his remarks by stating that Colombia 1 s economic prospects are excellent and that the next 12 to 14 yea(s could see a doubling of per capita income. Dr. Wiesner Duran outlined the government's development strategy as one of integrating regional growth centers into a national market through the provision of expanded and improved transport and communication services, together with greater incentives for non-coffee exports and measures to increase allocative and productive efficiency. He reviewed the large public sector investment pro- gram planned for the 1979-82 period, noting that solving the country's energy ~ problem would receive high priority from the government, as would production oriented and social projects such as the national nutrition and integrated rural development programs. Minister Vasquez Restrepo provided the meeting with per- spective on the country's energy problem and detailed the government's plans to deal with this problem. He pointed out that Colombia has a substantial and well- diversified energy resource base and that the problem was being attacked on several fronts, including increased public investment in energy and raising prices in order to encourage private investment and to conserve energy. The group agreed with the assessment that Colombia had made substantial progress over the past few years in accelerating growth, reducing unemployment, strengthening the public finances and balance of payments, and establishing a framework for increases in efficiency. The group shared the government's con- cern over the rate of inflation, and was impressed with the measures taken to reduce it. The group was also favorably impressed with the adjustments made to the prices of gasoline and other subsidized products, which played a major role in raising public sector savings. Colombia's effort to improve the situ- ation of the poorest 50% of the population was applauded. The government's development strategy, and particularly its energy program, received strong support from the group, which generally agreed with the government and Bank's assessment of the country's future development prospects. . .. / •  - 3 - • The group reviewed Colombia's external capital requirements and agreed that public sector loan commitments of the order of $1,260 million annually on average would be needed in the four years 1979-82. The group discussed the iist of projects prepared by the government and in light of Colombia's favorable economic position and prospects, endorsed Colombia's gradual tran- sition to conventional external financing and agreed that Colombia is credit- worthy for the required amounts of external borrowing. The group also agreed that co-financing would be appropriate for several of the large projects on the list of projects. The group expressed confidence in the government's debt management goals and supported the government's in- tention to base borrowing decisions on project priorities and sound financial ; planning. • A significant feature of the meeting was the interest expressed by group members in many of the projects included i11 the project list . • •