Bogotá, July 28, 2015 (SIG).
Growth “with peace would be 5.5 to 6 percent, and possibly even higher”, President Santos said. Photo: Juan Pablo Bello - SIG
The National Government committed itself to achieve a 4.5 percent economic growth rate in 2018. The announcement was made by President Juan Manuel Santos upon opening the fifth session of the ‘Estamos cumpliendo’ (‘Keeping Our Word´’) tour this Tuesday in Bogotá, during which the Government presented its accountability report to the country on the achievements and goals of the Finance sector over the course of his administration.
Besides the Head of State, participants included the Minister of Finance, Mauricio Cárdenas, as well as vice ministers, officers and directors of that ministry and other entities of the country’s economic sector.
Aiming at a healthy growth
“Minister, let’s set 4.5 percent as a goal; if you wish, you may write the check. I would say that among those objectives, a 4.5 percent growth has to be accompanied by what we have achieved to date. It should be a healthy growth, concurrently creating jobs, as we have done over the past years, because we have created many jobs, and it should be a low inflation growth, because this is a very important aspect”, the President said.
Growth would increase with peace
According to President Santos, if Colombia achieves peace, growth would increase to 5.5 to 6 percent, or more.
“Why do I say that growth with peace would be between 5.5 and 6 percent and possibly higher? Because the more we study the cost of this conflict, the more we find the obstacles the conflict has meant for the country’s development and growth”, the Head of State said.
And he added: “There are zones in the country, as indicated in studies such as the one carried out by the Universidad de los Andes, which could grow between 6 and 8 percent without the armed conflict. This will also provide an important boost for the economy and for productivity, which is what Latin America needs the most”.
Goals and objectives
During the accountability report session, President Santos presented a balance of the sector’s achievements and goals:
Among the goals for 2018, besides the previously mentioned economic growth, the increase in annual tax collection to 147 trillion pesos is worth noting. If this is achieved, it will mean that the Government will have increased its annual tax collection by nearly 82 trillion pesos during President Santos’ administration.
Furthermore, as part of an anticyclical strategy, the PIPE 2.0 was set in motion with the purpose of achieving an economic growth rate this year of at least 3.5 percent, which is 7 times the Latin American average.
Among the objectives sought by 2018, the following stand out:
• Maintaining macroeconomic stability and fiscal balance.
• Driving the economy’s growth and the middle class. Less poverty, more employment, more formality.
• Promoting access to financial services.
• Optimizing the tax structure: a more equitable, simple and efficient system.
With this action plan, the Government expects to have enough resources, and financial soundness and stability to be able to build the country it has in mind: a country in peace, more equitable and better educated.
Among the accomplishments, the following are worth noting:
• Last year, the Colombian economy was the one with the highest growth in Latin America and the seventh worldwide.
• Budget execution records were set. As of June 2015, 41 percent of the Nation’s General Budget has been executed. This surpasses the average of the past 12 years.
• The National Government’s deficit dropped to half of what it was, fulfilling the goal set in the fiscal rule law.
• The investment rate increased, surpassing 30 percent of the GDP over the first quarter of 2015.
• Tax collection was nearly doubled, jumping from 62 trillion pesos in 2010 to 108 trillion pesos in 2014.
• Risk rating agencies improved Colombia’s rating twice in less than four years, something that was unprecedented.
2010 - 2014 Results
Between 2010 and 2014, the construction of the New Colombia has progressed as follows:
• Economic growth went from 4 to 4.6 percent over that period.
• Exports grew from US$ 40 billion to US$ 57 billion.
• The FTAs in force increased from 26 to 60.
• Imports went from US$ 38 billion to US$ 61 billion.
• Unemployment was reduced from 11.8 percent to 9.1 percent.
• Poverty decreased from 37.2 to 28.5 percent.
• Extreme poverty dropped from 12.3 to 8.2 percent.
Fiscal responsibility with a very progressive social agenda
As explained by President Santos, “the economy is facing harsh weather today, an international storm, as the one being faced by all the economies of the region, and we are probably in the strongest position or in one of the most solid positions in all of Latin America”.
In this respect, he stated that this is something that “is being recognized by the markets, it is being acknowledged by investors, it is being pointed out by analysts, because they are seeing that Colombia is down its job in the right manner”.
“What we have built over these first five years in the government –we will complete five years in one week-, has been an effort that I would summarize as fiscal responsibility with a very progressive and aggressive social agenda”, he said.
And he added that those two components have yielded very positive results in all fronts, a fact that is being recognized by all international analysts.
“Now, the challenge is to maintain that sort of virtuous circle where we are still positioned and which we achieved through the efforts we have made, efforts on the legal front, the constitutional front, on specific policies, on policies that have enabled us to be the country with the highest economic growth among the medium and large-sized countries in Latin America last year”, the President of the Republic pointed out.