News Brief No. 01/22

News Brief: IMF Management Approves Letter of Intent for Colombia's Second Year Under the EFF

February 26, 2001

Claudio Loser, Director of the Western Hemisphere Department of the International Monetary Fund (IMF), announced today that IMF management has endorsed the letter of intent submitted by the Colombian authorities and that it will forward it to the Executive Board for approval. Colombia's Article IV consultation and the letter of intent are expected to be considered by the Executive Board before the end of March 2001. The letter of intent describes the authorities' macroeconomic and structural reform program as Colombia enters the second year of its three-year economic recovery program supported by the Extended Fund Facility (EFF) approved in December 1999.

According to Loser, "The Colombian economy staged a notable recovery in 2000 after the 1998-99 recession, as real GDP grew by nearly 3 percent, inflation declined to below 9 percent (compared with the central bank's target of 10 percent), and the combined public sector deficit was reduced to an estimated 3.6 percent of GDP (from 5.5 percent of GDP in 1999).

"For 2001, the authorities have made a firm commitment to bring down the combined public sector deficit to 2.8 percent of GDP, and have adopted a monetary policy framework based on inflation targeting as they continue their disinflation policy. The program envisages an acceleration of structural reforms to ensure that the ongoing economic growth is sustained over the medium term to support employment growth and the alleviation of poverty," Loser said.