Announcement of Ninth Meeting of the Consultative Group for Colombia on June 29, 1977

eWorldBank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A. • Telephone: (202) 393-6360 - - - - - - - --------------------------------------- BANK NEWS RELEASE JUNE 29, 1977 NINTH MEETING OF THE CONSULTATIVE GROUP FOR COLOMBIA The following announcement was issued today at the World Bank's European Office in Paris. A meeting of the Consuaative Group for Colombia, sponsored by the World Bank, was held in Paris on June 27 and 28, 1977. This was the ninth meeting of the Group since its inception in 1962. Its main purpose was to facilitiate the flow of external capital resources in support of Colombia's economic development efforts. The delegations of the Government of Colombia was headed by Dr. Abdon Espinosa Valderrama. The meeting was conducted under the chairmanship of Dr. Adalbert Krieger, World Bank, Vice President for Latin America and the Caribbean. Representatives of the governments of Belgium, Canada, France, • Germany, Italy, Japan, the Netherlands, Spain, the United Kingdom and the United States attended the meeting. Representatives of the International Monetary Fund, the Inter-American Development Bank, the Permanent Executive Commission of the Economic and Social Inter-American Council (CEPCIES) and the United Nations Development Programme were in attendance. Switzerland and the Organization for Economic Cooperation and Development were also represented. The Group discussed a report on Colombia's economic situation and prospects prepared by the World Bank and reviewed the country's needs for external financing during 1977-79 in the light of the list of projects submitted by the Colombian authorities. In his address to the meeting, Minister Espinosa Valderrama traced the evolution of the Colombian economy from the not-too-distant past when the balance of payments acted as a major constraint to growth to the present comfortable position of foreign exchange reserves. He observed that this was achieved both through successful diversification of exports as well as higher coffee prices. The Minister also reviewed the events leading up to the recent rekindling of serious inflationary pressures and the policies instituted to combat them. He detailed the measures which the Government has taken in the monetary field with the view of restraining aggregate demand. He also emphasized the Government's efforts to contain inflation by increasing supplies over the short term of both domestically produced and imported goods. The Minister attributed recent inflationary pressures to last year's serious drought which generated shortages of • foodstuffs and precipitated inordinate increases in their prices. He I ...  - 2 - likewise stressed the delayed role of last year's monetary expansion in raising aggregate demand. The Minister stated that the Government's anti-inflationary measures are beginning to bear fruJ.t and the rate of inflation is subsiding. In discussihg the Government 1 s development • thrust he emphasized the ordering of priorities rn favor of Colombia's poorest population segments. The Minister also emphasized the dilemma of fighting inflation while continuing to pro110te development. In spite of this obstacle, economic growth should accelerate and contribute to increased employment. The Minister reviewed the considerable progress registered by public finances subsequent to the tax reform of 1974 and the under- pining which it has provided for increased public sector investment. Concluding his presentation, the Minister stated that Colombia's problems are the same as those of the rest of the world -- energy and food -- and the Government's development strategy aimed at coping with both of these challenges. Other members of the Colombian delegation addressed themselves to an analysis of the sectoral priorities in the Government's development strategy. In this connection, they reviewed the external capital requirements, emphasizing the role of hydroelectric power. The Group noted that Colombia had made substantial progress over the past several years in accelerating growth, reducing unemployment and strengthening the balance of payments. It was impressed by the diversi- fication of Colombia's exports through its success in expanding non- traditional exports. Furthermore, it was noted that the Government's far-reaching tax reform had strengthened public finances. The Colombian effort to improve the situation of the poorest 50 percent of the population was supported. The Group shared the Government's concern about • rate of inflation but was impressed with the measures taken to reduce it. The Group reviewed Colombia's external capital requirements and agreed that to achieve the necessary disbursement levels, project loan commitments of the order of U.S. $600 million annually on the average would be needed in the three-year period 1977-79. The Group discussed the list of projects prepared by the Government with total external financing requirement of about U.S. $3.4 billion for 1977-79, an aroount which should enable the project loan commitments to reach the desirable level. In light of Colombia 1 s greatly improved economic and balance of payments position the Group endorsed Colombia's greater reliance on conventional external financing and agreed that Colombia is creditworthy for the required amounts of external financing. The Group also agreed that for several of the large projects included in the project list, co-financing would be desirable. The Group noted the Government's determination to pursue a prudent debt management policy, and supported the Government's intention to ensure that borrowing decisions are consistent with project priorities and sound financial • planning. A noteworthy feature of the meeting was the interest expressed by Group members in many of the projects included in the project list. It was agreed that the Group would meet again in approximatley eighteen months. - 0 -