After a visit by the International Monetary Fund to Colombia in February 2023, they have issued a report in which they conclude that The New Granada country has lowered the deficit in 2022 compared to 2021 by almost three percentage points.
Colombia had a change of government that took office in August 2022 and, despite this, they have been able to achieve macroeconomic policies that allow compliance with agreements agreed with the International Monetary Fund.
In this year, to obtain economic growth certain conditions must be met, one of them is the tightening of Colombia’s macroeconomic policyfor this, the Bank of the Republic has confirmed that although inflation for this year is expected to be close to 7%, they estimate that by 2024 inflation will fall to 3%.
By the end of 2022, Colombia had the third highest inflation in Latin America, with Venezuela being the first with 220%, followed by Argentina with 95.9%.
Role of the Fintech sector for growth in Colombia
Since 2021 the growth of the fintech sector in Colombia has been sustained, this is derived from the pandemic effect that forced the digitization of financial services at global levels, by 2022 according to data from the Global Innovation Index (WIPO, 2022), Colombia ranks fourth among the 18 economies of Latin America and the Caribbeanas well as the 15th place of the 36th economies that are grouped in medium-high income according to this indicator.
Likewise, the data provided in the Finnovista report for May 2022 indicated that Already in Colombia there were some 279 Fintechs in operation, which places the New Granadan country as the third country in Latin America and the Caribbean with the most Fintechjust behind Mexico and Brazil.
IMF projections
With the data that has been presented to the commission of the International Monetary Fund, the commission has concluded that GDP growth in Colombia will slow down this 2023, this as a consequence of the tightening of macroeconomic policies, in addition to the world panorama; however, this slight slowdown will cause the estimated inflation for 2023 of 7% to be reduced accordingly, and get closer to the 2024 goal.
The members of the commission consider that Colombia has been making the necessary adjustments that guarantee the expected growth. By 2022, it grew more than the average for the region due to the fiscal adjustments it made, reaching a growth of 8.1% according to data from the same International Monetary Fund, thanks to its tightening of macroeconomic policies and the fact that it continued to reduce public spending.
Despite the measure to freeze fuel prices for the beginning of 2022 had no positive effects in the economy, at the end of the year they have been able to change this situation.
The commission recommends thatTo ensure that the path of fiscal consolidation over the medium term is consistent with an expansion in social spending, additional policies to continue phasing out fuel subsidies that generate distortions, reduce budgetary rigidities, ensure that permanent spending is financed by permanent sources of income and save windfall income (in coherence with the fiscal rule)”.
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