EXHIBIT D
REPUBLIC OF COLOMBIA
Table of Contents
| Page | ||||
| MAP OF COLOMBIA |
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| SUMMARY |
D-3 | |||
| CURRENCY OF PRESENTATION |
D-5 | |||
| INTRODUCTION |
D-5 | |||
| REPUBLIC OF COLOMBIA |
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| ECONOMY |
D-20 | |||
| FOREIGN TRADE AND BALANCE OF PAYMENTS |
D-52 | |||
| MONETARY SYSTEM |
D-68 | |||
| PUBLIC SECTOR FINANCE |
D-78 | |||
| PUBLIC SECTOR DEBT |
D-87 | |||
| TABLES AND SUPPLEMENTARY INFORMATION |
D-93 | |||
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MAP OF COLOMBIA
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SUMMARY
The following summary is qualified in its entirety by, and should be read in conjunction with, the detailed information appearing herein.
Selected Colombian Economic Indicators
| Domestic Economy | 2010 | 2011 | 2012 | 2013 | 2014 | |||||||||||||||
| Real GDP Growth (percent)(1) |
4.0 | % | 6.6 | % | 4.0 | % | 4.9 | % | 4.6 | % | ||||||||||
| Gross Fixed Investment Growth (percent)(1) |
4.9 | 19.0 | 4.7 | 6.0 | 10.9 | |||||||||||||||
| Private Consumption Growth (percent)(1) |
5.0 | 6.0 | 4.4 | 3.8 | 4.4 | |||||||||||||||
| Public Consumption Growth (percent)(1) |
5.6 | 3.6 | 6.3 | 9.2 | 6.2 | |||||||||||||||
| Consumer Price Index(2) |
3.2 | 3.7 | 2.4 | 1.9 | 3.6 | |||||||||||||||
| Producer Price Index(2) |
4.4 | 5.5 | (3.0 | ) | (0.5 | ) | 6.3 | |||||||||||||
| Interest Rate (percent)(3) |
3.7 | 4.2 | 5.4 | 5.1 | 4.3 | |||||||||||||||
| Unemployment Rate (percent)(4) |
11.1 | 9.8 | 9.6 | 8.4 | 8.7 | |||||||||||||||
| Balance of Payments(5) | (millions of U.S. dollars) | |||||||||||||||||||
| Exports of Goods |
40,762 | 58,262 | 61,604 | 60,281 | 57,027 | |||||||||||||||
| Imports of Goods |
38,406 | 52,126 | 56,648 | 57,101 | 61,610 | |||||||||||||||
| Current Account Balance |
(8,663 | ) | (9,710 | ) | (11,306 | ) | (12,367 | ) | 19,549 | |||||||||||
| Net Foreign Direct Investment |
(947 | ) | (6,228 | ) | (15,646 | ) | (8,557 | ) | 12,358 | |||||||||||
| Net International Reserves |
28,452 | 32,300 | 37,467 | 43,633 | 47,323 | |||||||||||||||
| Months of Coverage of Imports (Goods and Services) |
7.2 | 6.2 | 6.5 | 7.5 | 7.6 | |||||||||||||||
| Public Finance(6) | (billions of pesos or percentage of GDP) | |||||||||||||||||||
| Non-financial Public Sector Revenue(7) |
Ps. | 219,631 | Ps. | 249,989 | Ps. | 285,297 | Ps. | 309,713 | Ps. | 333,206 | ||||||||||
| Non-financial Public Sector Expenditures(7) |
229,354 | 255,860 | 278,032 | 315,285 | 346,539 | |||||||||||||||
| Non-financial Public Sector Primary Surplus/(Deficit)(8) |
(651 | ) | 7,059 | 21,984 | 10,956 | 5,483 | ||||||||||||||
| Percent of Nominal GDP |
(0.1 | )% | 1.1 | % | 3.3 | % | 1.6 | % | 0.7 | % | ||||||||||
| Non-financial Public Sector Fiscal Surplus/(Deficit) |
(12,655 | ) | (11,549 | ) | 2,824 | (6,968 | ) | (13,264 | ) | |||||||||||
| Percent of Nominal GDP |
(3.1 | )% | (1.8 | )% | 0.4 | % | (1.0 | )% | (1.8 | )% | ||||||||||
| Central Government Fiscal Surplus/(Deficit) |
(21,019 | ) | (17,507 | ) | (15,440 | ) | (16,645 | ) | (18,356 | ) | ||||||||||
| Percent of Nominal GDP |
(3.9 | )% | (2.8 | )% | (2.3 | )% | (2.3 | )% | (2.4 | )% | ||||||||||
| Public Debt(9) | (billions of pesos or percentage of GDP) | |||||||||||||||||||
| Public Sector Internal Funded Debt(10) |
Ps. | 183,319 | Ps. | 192,105 | Ps. | 200,523 | Ps. | 227,032 | Ps. | 244,933 | ||||||||||
| Percent of Nominal GDP(1) |
33.6 | % | 31.0 | % | 30.2 | % | 32.0 | % | 32.4 | % | ||||||||||
| Public Sector External Funded Debt(11) |
$ | 35,849 | $ | 38,533 | $ | 39,165 | $ | 40,953 | $ | 42,915 | ||||||||||
| Percent of Nominal GDP(1) |
12,6 | % | 12.1 | % | 10.4 | % | 11.1 | % | 13.6 | % | ||||||||||
| 1: | Figures for 2013 and 2014 are preliminary. Preliminary figures are published in March in the year succeeding the reference period and become final two years thereafter. |
| 2: | Percentage change over the twelve months ended December 31 of each year. |
| 3: | Average for each year of the short-term composite reference rate, as calculated by the Superintendencia Financiera (Financial Superintendency). |
| 4: | Refers to the average national unemployment rates in December of each year. |
| 5: | Calculations based on the sixth edition of the IMF’s Balance of Payments Manual. For more information, see “—Foreign Trade and Balance of Payments—Balance of Payments”. |
| 6: | All figures calculated according to IMF methodology, which includes privatization, concession and securitization proceeds as part of public sector revenues and nets transfers among the different levels of the non-financial public sector. |
| 7: | The amounts of transfers among the different levels of the consolidated non-financial public sector are not eliminated in the calculation of consolidated non-financial public sector revenue and consolidated non-financial public sector expenditures and, accordingly, the revenue and expenditure figures included above are greater than those that would appear had such transfers been eliminated upon consolidation. |
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| 8: | Primary surplus/(deficit) equals total consolidated non-financial public sector surplus/(deficit) without taking into account interest payments or interest income. |
| 9: | Exchange rates as of December 31 of each year. |
| 10: | Includes peso-denominated debt of the Government (excluding state-owned financial institutions) with an original maturity of more than one year and public sector entities’ guaranteed internal debt. |
| 11: | In millions of dollars. Includes external debt of the Government (including Banco de la República, public agencies and entities, departments and municipal governments and state-owned financial institutions) with an original maturity of more than one year. |
| Sources: | Banco de la República, Ministry of Finance and Public Credit (“Ministry of Finance”), DANE and CONFIS. |
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CURRENCY OF PRESENTATION
All references herein to “pesos” and “Ps.” are to the currency of Colombia, and all references herein to “U.S. dollars,” “dollars,” “U.S. $” and “$” are to the currency of the United States. Unless otherwise indicated, all peso amounts are stated in nominal terms. As used herein, the term “billion” means one thousand million, or 1,000,000,000, and the term “trillion” means one thousand billion, or 1,000,000,000,000. The Financial Superintendency calculates and publishes a rate (the “representative market rate”) on a daily basis which is the average of the buy and sell foreign exchange rates quoted on the previous business day by certain commercial banks and financial corporations in the four largest Colombian cities. On September 9, 2015, the representative market rate published by the Financial Superintendency for the payment of obligations denominated in U.S. dollars was Ps. 3,138.46. Historical amounts translated into pesos or dollars have been converted at the historical rates of exchange summarized below. See “Monetary System—Foreign Exchange Rates and International Reserves.” The fiscal year of Colombia ends on December 31 of each year. The fiscal year ended December 31, 2014 is referred to herein as “2014,” and other years are referred to in a similar manner.
INTRODUCTION
From 2010 to 2014, Colombia enjoyed real Gross Domestic Product (“GDP”) growth every year. Real GDP grew by 4.0% in 2010, 6.6% in 2011, 4.0% in 2012, 4.9% in 2013, and 4.6% in 2014. The following factors contributed to the positive growth in 2014: (i) increased public consumption at an annual rate of 6.2% when compared to 2013 and investment in housing and civil works; (ii) increased private consumption at an annual rate of 4.4% when compared to 2013 due to higher consumer confidence as unemployment decreased and quality of employment improved; (iii) higher activity in the construction sector and in the retail, restaurants and hotels and the financial services subsectors; and (iv) Government stimulus policies and favorable liquidity conditions, credit availability and low interest rates. These factors offset the performance of the mining sector during the year, which experienced a decrease of 0.2% due to weak external demand and increased international competitiveness.
During 2014, the sectors that experienced the greatest real growth were electricity, gas and water (3.8%), construction (9.9%) and services (4.9%). The mining sector was the only sector that registered a decrease when compared to 2013 (-0.2%).
Inflation, as measured by the change in the consumer price index, was at 2.0% (on an annualized basis) increased to 3.2% in 2010, and increased to 3.7% in 2011. Inflation was at 2.4% in 2012, declined to 1.9% in 2013 and in 2014 increase to 3.6%. The rate of inflation in 2014 was higher than in 2013 mainly due to increases in the prices of food, housing and transportation (1.31%, 1.16% and 0.47% more than the inflation rate registered for these items in 2013, respectively). On the other hand, the items that registered the lowest price increases were recreation, communications and clothing (0.08, 0.08, and 0.07 percentage points greater than the inflation rate registered for these items in 2013, respectively).
Due to the implementation of trade and foreign exchange liberalization policies, Colombia has experienced current account deficits in most years since 1994. In 2010, the current account deficit increased to $8,663 million and the trade surplus decreased to $2,356 million, while the financial account deficit increased to $9,275 million. In 2011, the current account deficit increased to $9,710 million, while the trade surplus increased to $6,137 million and the financial account deficit decreased to $8,925 million. In 2012, the current account deficit increased by to $11,306 million, the trade surplus decreased to $4,956 million, while the financial account deficit increased to $11,754 million. In 2013, the current account deficit increased to $12,367 million and the trade surplus decreased to $3,180 million, while the financial account deficit increased to $11,845 million. In 2014, the current account deficit increased to $19,549 million, while the trade surplus decreased to a deficit of $4,583 million. The financial account deficit increased to $19,745 million. In 2014, exports of oil and its derivatives decreased by $3,126 million, or 9.8%, while exports of gold and emeralds decreased by $631 million, or 26.9%. Coal exports increased by $122 million, or 1.8%, to $6,810 million. Foreign direct investment recorded an increase in the capital account in 2014, having increased by 0.3%. Foreign direct investment grew mainly as a result of increased investments in sectors such manufacturing, transportation and financial services. Net foreign investment (including direct and portfolio investment) recorded a net inflow of $8,779 million in 2010. In 2011 net foreign investment increased to a net inflow of $17,547 million. In 2012, net foreign investment increased to a net inflow of $18,666 million. In 2013, net foreign investment stood at $20,993 million, which represented an increase of $2,327 million. In 2014, net foreign investment increased to a net inflow of $28,915 million, which represented an increase of $7,922 between 2013 and 2014.
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Net international reserves at year end increased from $28,452 million in 2010, to $32,300 million in 2011 and to $37,467 in 2012. At the end of 2013, net international reserves totaled $43,633 million and increased to $47,323 million in 2014.
Colombia’s ratio of total net non-financial public sector debt to GDP decreased from 35.6% in 2010, to 34.1% in 2011 and 32.6% in 2012, then increased to 34.6% in 2013 and to 38.3% in 2014. As a consequence of the international financial crisis and its effects on the Colombian economy, the Government experienced deterioration in its fiscal position during 2009 and 2010. The combination of lower tax revenues and the implementation of a countercyclical policy in order to stimulate economic growth resulted in an increase in the Government’s fiscal deficit. Colombia’s non-financial public sector recorded deficits of 3.1% of GDP in 2010 and 1.8% in 2011, a surplus of 0.4% of GDP in 2012 and in 2013, the non-financial public sector recorded a deficit of 1.0% of GDP. In 2014, the non-financial public sector recorded a deficit of 1.8% of GDP.
The Central Government’s deficit was 3.9% of GDP in 2010, 2.8% of GDP in 2011, 2.3% of GDP in 2012, 2.3% of GDP in 2013 and 2.4% of GDP in 2014. On June 17, 2015, the executive board of the International Monetary Fund (“IMF”) approved a two-year arrangement under the IMF’s Flexible Credit Line in SDR $3.87 billion an amount equivalent to approximately $5.45 billion at June 17, 2015. The two-year arrangement is a successor arrangement to the two-year SDR $3.87 billion (an amount equivalent to approximately $5.84 billion at June 24, 2013) Flexible Credit Line approved in June 2013. The original Flexible Credit Line was approved in May 2009 for $10.5 billion. The IMF’s Flexible Credit Line provides Colombia with access to IMF resources with no ongoing conditions, is a renewable credit line subject to a two-year limit and allows Colombia to draw on it at any time or to treat it as a precautionary instrument. To date, Colombia has not drawn on the Flexible Credit Line. See “Public Sector Finance—Flexible Credit Line with IMF.”
Since 1993, Colombia has obtained access to the international capital markets through the issuance of bonds in the United States, Europe and Japan and through borrowings from commercial bank syndicates. Colombia has regularly met all principal and interest obligations on its external debt for over 60 years.
Other factors, such as increases in inflation, exchange rate fluctuations, increases in interest rates, declines in foreign direct and portfolio investment, adverse conditions in the international capital markets, changes in international commodity prices, violence and disruption associated with the guerilla groups and narcotics organizations and other political, economic and diplomatic developments in or affecting Colombia could have a material adverse effect on the country’s economy.
Presidential elections took place in May 2014. Juan Manuel Santos was reelected as President of Colombia after winning the second ballot against Óscar Iván Zuluaga with 50.95% of the vote.
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REPUBLIC OF COLOMBIA
Geography and Population
Colombia is the fourth largest country in South America, with a territory of 441,020 square miles (1,141,748 square kilometers). Located on the northwestern corner of the South American continent, Colombia borders Panama and the Caribbean Sea to the north, Peru and Ecuador to the south, Venezuela and Brazil to the east and the Pacific Ocean to the west.
Colombia is a country of great geographical diversity. Three ranges of the Andes, the Western, Central and Eastern Cordilleras, occupy the southwestern and central sections of the country, running through it from south to north. Grassland plains, known as Los Llanos, lie to the northeast of these ranges and extend to the Venezuelan border. The Amazon forest lies to the south of the grassland plains. The Magdalena River rises in the Central Cordillera and flows to the Caribbean Sea, near the city of Barranquilla, through a rich alluvial plain. Approximately 4% of the land is arable, approximately 41% is suitable for grazing and about 55% is forested. Colombia lies almost entirely in the north tropical zone; however, the country’s regional climates vary with altitude. A tropical climate predominates in the coastal and Amazon regions, while a temperate climate predominates in the mountains.
According to the National Administrative Department of Statistics (“DANE”), Colombia’s population in 2014 was estimated to be 47.7 million, compared with 47.1 million in 2013. Based on the latest available population statistics for Colombian cities, in 2014, 7.8 million people lived in the metropolitan area of Bogotá, the capital of Colombia. Furthermore, in 2014, Medellín and Cali, the second and third largest cities, had populations of approximately 2.4 million and 2.3 million, respectively. The most important urban centers, with the exception of Barranquilla (the largest port city), are located in the Cordillera valleys. Colombia has a population density of approximately 108 people per square mile (42 people per square kilometer).
Colombia is generally classified as a middle-income developing country. The following table sets forth the latest selective comparative statistics published by the World Bank.
Selected Comparative Statistics
| Colombia | Venezuela | Brazil | Mexico | U.S. | ||||||||||||||||
| GNI Per Capita (2013)(l) |
$ | 7,590 | $ | 12,550 | $ | 11,690 | $ | 9,940 | $ | 53,470 | ||||||||||
| Life Expectancy at Birth (2013) |
78 | 78 | 78 | 80 | 81 | |||||||||||||||
| Illiteracy Rate (2) |
6 | % | 4 | % | 9 | % | 6 | % | n/a | |||||||||||
| Infant Mortality (2013)(3) |
15 | 13 | 12 | 13 | 6 | |||||||||||||||
| Poverty (4) |
30.6 | % | 25.4 | % | 8.9 | % | 52.3 | % | n/a | |||||||||||
n/a = Not available.
| 1: | GNI per capita (formerly GNP per capita) is the gross national income divided by the midyear population, converted to U.S. dollars using the World Bank Atlas method. |
| 2: | Percentage ages 15 and over. Data for Venezuela is from 2009. Data for Colombia is from 2011 and Mexico and Brazil are from 2012. |
| 3: | Number of infants dying before reaching the age of one year, per 1,000 live births. |
| 4: | Percentage of population living below national poverty line. Data from 2013 |
| Sources: | World Bank Group, Development Data Group. |
Government and Political Parties
The Republic of Colombia is one of the oldest democracies in the Americas, with regular transitions of power between successive administrations since 1957. In 1991, a popularly elected Constitutional Assembly approved a new Constitution, replacing the Constitution of 1886. The main features of the 1991 Constitution include further governmental decentralization, autonomy of the central bank, increased Congressional powers and the creation of several new public agencies. Colombia continues to be governed as a presidential republic. In the presidential elections that took place on May 25, 2014, Óscar Iván Zuluaga of
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Centro Democrático Mano Firme Corazón Grande won the first ballot with 29.25% of the vote, while Juan Manuel Santos of Partido Social de La Unidad Nacional came in second with 25.69% of the vote. On June 15, 2014, Juan Manual Santos won the second ballot and was elected President of the Republic of Colombia for a second term with 50.95% of the vote. President-elect Santos took his oath and assumed the office of the President on August 7, 2014. The next presidential election is scheduled for May 2018.
In April 2014, President Santos presented his plan for the period 2014 to 2018. The plan aims to pursue the following goals, among others:
| • | develop a supportive and inclusive country and a country of opportunities: The Santos administration seeks to stimulate growth in vulnerable sectors, particularly in education, housing and health. In the education sector, the plan aims to improve the lives of teachers and students. In the housing sector, the Santos administration intends to stimulate a residential leasing plan, while in the health sector, the Santos administration seeks to support the rights of patients and improve the quality of service; |
| • | build a country of entrepreneurs and achieve full employment: The objective of this second pillar is to support and expand the industrial sector, as well as enhance tourism and the service sector. Attention will also be paid to prioritizing water conservation and the environment; and |
| • | establish a country without fear or war and in peace: The third pillar will focus on strengthening public safety, restructuring of the government prosecution office and the search for a responsive, transparent and efficient judicial system. |
No assurance can be given that any of these goals will be achieved.
Colombia is divided into 32 departments. Each department is divided into municipalities. Both the governors of the departments and mayors of the municipalities are elected by direct popular vote.
Judicial power is vested in the Corte Constitucional (Constitutional Court), the Corte Suprema de Justicia (Supreme Court of Justice, or Supreme Court), the Consejo de Estado (Council of State), the Consejo Superior de la Judicatura (Supreme Judicial Council), the Fiscalía General de la Nación (National Prosecutor General) and in such lower courts as may be established by law. The function of the Constitutional Court, whose nine members are elected by the Senate for an eight-year term, is to assure that all laws are consistent with the Constitution and to review all decisions regarding fundamental rights. The Supreme Court is the final appellate court for resolving civil, criminal and labor proceedings. The Council of State adjudicates all matters relating to the exercise of public authority or actions taken by the public sector, including the review of all administrative decisions or resolutions that are alleged to contradict the Constitution or the law. The Council of State also acts as advisor to the Government on administrative matters. Supreme Court and Council of State justices are appointed for eight-year terms by their predecessors from a list of candidates provided by the Supreme Judicial Council. The National Prosecutor General, who is appointed for a four-year term by the Supreme Court from a list of three candidates submitted by the President, acts as the nation’s prosecutor. The judicial branch is independent from the executive branch with respect to judicial appointments as well as budgetary matters.
National legislative power is vested in Congress, which consists of a 102-member Senate and a 166-member Chamber of Representatives. Senators and Representatives are elected by direct popular vote for terms of four years. The most recent Congressional elections occurred on March 9, 2014. The following table sets forth those Congressional election results by party.
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Congressional Election Results by Party
| Party | Number of elected officials | |
| Senate | ||
| Partido Social de la Unidad Nacional |
21 | |
| Centro Democrático Mano Firme Corazón Grande |
19 | |
| Partido Conservador Colombiano |
19 | |
| Partido Liberal Colombiano |
17 | |
| Partido Cambio Radical |
9 | |
| Partido Alianza Verde |
5 | |
| Polo Democrático Alternativo |
5 | |
| Partido Opción Ciudadana |
5 | |
| Chamber of Representatives | ||
| Partido Social de la Unidad Nacional |
39 | |
| Partido Liberal Colombiano |
37 | |
| Partido Conservador Colombiano |
27 | |
| Partido Cambio Radical |
16 | |
| Centro Democrático Mano Firme Corazón Grande, |
12 | |
| Partido Alianza Verde |
6 | |
| Partido Opción Ciudadana |
6 | |
| Polo Democrático Alternativo |
3 | |
| Partido Movimiento Independiente de Renovación Absoluta |
3 | |
| Source: | Senate and Chamber of Representatives. |
Senators are elected on a non-territorial basis, while Representatives are elected on the basis of proportional, territorial representation. To be enacted into law, a bill must be approved by a majority of both houses of Congress. Differences between the two houses of Congress are resolved by a bicameral committee, which drafts a joint bill that is presented to both houses. The Constitution grants the President the right to veto bills passed by Congress, subject to Congressional override. Upon the signature of all ministers, the President may issue decrees under special circumstances, including a state of external war, significant domestic disruption or economic, social or ecological emergency. In each department, legislative power is vested in departmental assemblies whose members are elected by direct popular vote. At the municipal level, legislative power is vested in municipal councils, which preside over budgetary and administrative matters.
Traditionally, the principal political parties have been the Liberal Party and the Conservative Party. Since the late 1980’s and the drafting of the 1991 Constitution, the political party scene in Colombia has been changing substantially in the dimensions of its division, polarization and level of institutionalization. The pluralistic awareness of citizens and the realities and changing social contexts in the country has allowed the foundation of new political parties: Alianza Social Independiente founded in 1991, Cambio Radical in 1998, Partido Social de la Unidad Nacional and Polo Democrático Alternativo in 2005 and Partido Alianza Verde in 2009, among others.
Of these parties, the Partido Social de la Unidad Nacional has played an important role since the presidential election of 2006. Results of Partido Social de la Unidad Nacional in the Congressional elections of 2014 confirm that it is a party that has a major stake in Colombian politics. The next presidential and congressional elections will be held in 2018.
The following table shows the party composition of the Chamber of Representatives and Senate following the elections in the years indicated.
Party Composition of the Colombian Congress (1)
| Party | Chamber of Representatives |
Senate | ||||||||||||||||||||||
| 2006 | 2010 | 2014 | 2006 | 2010 | 2014 | |||||||||||||||||||
| Partido Social de La Unidad Nacional |
20.5 | % | 28.4 | % | 16.1 | % | 19.6 | % | 28.0 | % | 15.6 | % | ||||||||||||
| Liberal |
21.7 | 21.8 | 14.1 | 16.6 | 17.0 | 12.2 | ||||||||||||||||||
| Conservative |
17.6 | 22.4 | 13.2 | 17.7 | 22.0 | 13.6 | ||||||||||||||||||
| Others |
40.2 | 27.3 | 56.7 | 46.1 | 33.0 | 58.6 | ||||||||||||||||||
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| (1) | Totals may differ due to rounding. |
| Source: | Senado (Senate) and Registraduría Nacional del Estado Civil (National Civil Registry). |
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Internal Security
Guerilla Activity
Guerilla organizations have long been a part of Colombian society. The principal active guerilla organizations are the Fuerzas Armadas Revolucionarias Colombianas (Colombian Revolutionary Armed Forces, or “FARC”) and the Ejército de Liberación Nacional (National Liberation Army, or “ELN”). In many remote regions of the country that have traditionally lacked an effective government presence, the guerillas have exerted influence over the local population. In recent years, many of the guerillas have funded their activities through kidnappings and protection and other services rendered to narcotics organizations. In addition, the guerilla organizations have continued to commit acts of terrorism to draw attention to their causes and have focused much of their activities on the pipeline network owned by Empresa Colombiana de Petróleos (Colombian Petroleum Company, or “Ecopetrol”), the national oil company. Pursuant to the Ley Nacional de Regalías (National Royalties Law) of 1994, Ecopetrol pays a fee, based on the quantity of oil transported and the distance the oil is transported, to the various townships through which its pipelines run. This fee was implemented in order to help align the local communities’ interests with those of Ecopetrol. According to Ecopetrol, there were 12 attacks in 2010, which resulted in $10.5 million in lost revenues, and 32 attacks in 2011, which resulted in $37.1 million in lost revenues. In 2012, there were 151 attacks on oil infrastructure, including the Caño Limón Coveñas pipeline, which resulted in $22.9 million in lost revenues. In 2013, there were 187 attacks on oil infrastructure, which resulted in $23.5 million in lost revenues. In 2014, there were 380 attacks on oil infrastructure, which resulted in $44 million in lost revenues. In addition, Ecopetrol experienced production losses of 1.9 million barrels of oil in 2013 and 10.2 million barrels of oil in 2014 as a result of delays caused to pipeline repairs when indigenous communities blocked access to the site. In 2013, the Government subsequently ordered the armed forces and police to monitor and patrol the areas most affected by the 2013 attacks.
Over the past two decades, Colombia has implemented various measures to address the violence associated with the guerilla movements, including bilateral negotiations, enactment of legislation to protect the victims of armed conflicts, increased investment and economic development in conflict areas and the introduction of social, political and economic reforms designed to improve living conditions, increase access to the political process and equalize the distribution of income.
ELN
In June 2000, the Government and the ELN began formal peace discussions, which subsequently ceased and resumed several times. In addition, the Government decided to grant political status to the ELN, an important step in the official negotiation process. On May 31, 2002, however, the Government suspended negotiations with the ELN after the breakdown of the discussions in December 2001. Although the Government has met with leaders of the ELN since December 2005 to discuss a possible peace agreement after a cease-fire and end of hostilities, an agreement has not yet been reached. The Government would have sought an agreement that provided humanitarian relief for all the victims of the conflict and included them in the peace-building process but so far, heads of the organization have not shown a willingness to enter into such a political agreement. On August 29, 2013, following the release by ELN of a Canadian hostage that had been held hostage for seven months, President Santos announced that the Government was ready to start peace talks with the ELN.
On June 10, 2014, the Government announced that it had been engaged in exploratory peace talks with the ELN since January 2014, after a series of previous meetings were held in 2013. The Government further stated that formal discussions with the ELN would not be initiated until all the necessary conditions for the peace agreement had been agreed. On May 14, 2015, Humberto de la Calle, the chief negotiator for the Government’s delegation at the Havana peace talks, invited the ELN to join the peace process in order to end the conflict. Mr. de la Calle emphasized that the discussion must include a bilateral cease fire. See “— Internal Security — FARC” below for more information on the Havana peace talks.
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FARC
In 2001 the Government and the FARC signed two agreements outlining the negotiation process: the Acuerdo de los Pozos and the Acuerdo de San Francisco. On February 20, 2002, however, then President Pastrana announced the suspension of peace negotiations with the FARC and the end of the negotiations due to increased violence by the FARC against the civilian population. Through 2006, the FARC continued its terrorist and narcotrafficking activities despite the Government’s ongoing military campaign against it. The FARC launched several bombings against military targets in urban areas, including Bogotá. The FARC also targeted numerous rural outposts, infrastructure targets and political adversaries and continued kidnappings across Colombia.
On September 4, 2012, President Santos announced a “General Agreement for the Termination of Conflict” between the Government and the FARC. The agreement establishes a procedure that aims to end the armed conflict. The proposed peace process includes an agenda with five concrete points: (i) rural development,;(ii) guarantees for political opposition and public participation; (iii) the end of armed conflict, (iv) combating drug trafficking; and (v) the rights of the victims. The agreement does not contemplate the cession of land or cessation of military operations. Negotiations started in the first half of October 2012 in Oslo, Norway and have continued in Havana, Cuba.
On May 26, 2013, the Government and the FARC achieved an agreement on the first negotiation point concerning rural development. The main points of the agreement covered the following topics: access and land use, unproductive lands, registry of title to property, protection of agricultural frontier areas and reserves, development programs with a territorial approach, infrastructure and land improvement, social development, encouragement of agricultural production, economic cooperation, food and nutrition policies.
An agreement on political participation, the next point in the negotiation agenda, was reached on November 6, 2013. The agreement includes: rights and guarantees for political opposition, including access to media, in particular for new political movements that appear once the final agreement is reached; democratic mechanisms for public participation, including direct participation; and measures to promote further participation, in equal conditions and with security guarantees, of all sectors of the society in national, regional and local politics, including the most vulnerable population.
On May 16, 2014, the Government and the FARC announced an agreement concerning the problem of drug trafficking. The agreement aims to: work with the people concerned; transform the affected farmlands; open new opportunities for communities and territories; guarantee the rights of rural farmers; clear the areas affected by land mines and unexploded ordnance; promote a comprehensive strategy to ensure full respect of the rule of law in the territories concerned; implement a program for eradicating illicit crops; strengthen institutional capabilities for the detection, control and reporting of illicit financial transactions; and promote new plans against money laundering.
On June 7, 2014, the Government and the FARC announced an agreement to take responsibility for the victims of the internal conflict, one of the most important points in the peace negotiations between the Government and the FARC. The agreement outlined ten basic principles: recognition of victims; acknowledgment of responsibility; recognition of the rights of the victims; victim participation; the discovery of the truth of what happened during the conflict; reparation for victims; guarantees of protection and security; guarantee of non-repetition; principle of reconciliation; and focus on human rights. Finalization of this agreement, however, is conditioned on a general agreement upon the full negotiating agenda and no assurance can be given that such agreement will be reached or that if it is reached, that the agreement will not be materially modified.
On January 5, 2015, President Santos emphasized that the continuing peace negotiation is one of the principal objectives of the Government in 2015. At a meeting with the negotiating team in 2014, he emphasized the benefits to Colombia following the unilateral ceasefire by the FARC and invited the ELN to take the same initiative. The Government negotiating team returned to Havana with the aim of concluding a peace agreement as soon as possible.
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On February 20, 2015, United States Secretary of State John Kerry announced that Bernie Aronson was appointed to support the Colombian peace process. The United States is not a direct participant in the negotiation table.
On March 7, 2015, as provided for in the de-escalation framework and seeking to build trust with, and to improve the security conditions of, the inhabitants of at risk zones in which land mines, improvised explosive devices, unexploded ordinance and other explosive remnants of war are present, the Government and the FARC agreed to request that the Norwegian People’s Aid organization lead and coordinate a clean-up and decontamination project in order to disarm and dispose of such explosive devices.
On July 12, 2015 delegations from the Government and the FARC announced that in order to provide confidence in the peace process, engender trust among the delegations, speed up agreement as to remaining items in the general agreement agenda and create the conditions for a general ceasefire of bilateral hostilities and disarmament, they decided to negotiate terms under which a general ceasefire of bilateral hostilities and disarmament would occur. Such ceasefire would require monitoring and verification of compliance with the ceasefire. To this effect, they have requested that a delegate from the Secretary General of the United Nations and a delegate of the Union of South American Nations follow the negotiations so as to aid in creating such a system. In the meantime, the FARC as a gesture of de-escalation, agreed to maintain unilateral suspension of all offensive actions. The Government, starting July 20, 2015, de-escalated its own military actions.
During 2014, 2,873 members of the FARC, ELN and other guerilla organizations were captured and 296 were killed during military encounters. In addition 1,349 members of the FARC, ELN and other rebel groups demobilized in 2014, which represented a decrease of 0.1% in demobilization compared to 2013. The Government estimated that in 2014 there were approximately 7,862 members of guerrilla groups, including the FARC and ELN rebels. With respect to Bandas Criminales al Servicio del Narcotráfico (criminal groups supporting drug traffic or “BACRIM”), in 2014, 2,666 members were captured and 24 were killed. The Colombian armed forces numbered 285,008 troops as of year-end 2014.
Paramilitary Activity
The emergence of so-called “paramilitary” organizations has added to the violence in the country and these groups, whose activities have been condemned by the Government, have shown little respect for human rights or the rule of law. The principal group of paramilitaries is the Autodefensas Unidas de Colombia (Colombian United Self-Defense Group, or “AUC”). On July 15, 2003, leaders of the AUC formally agreed to begin peace negotiations with the Government and announced their intention to demobilize their forces entirely by December 2005. Five divisions of unauthorized paramilitary organizations were dismantled in November and December 2004 under a demobilization plan developed by the Government. The demobilization plan is the result of the Santa Fe de Ralito Agreement that was signed between these paramilitary organizations and the Government on July 23, 2003 and ratified on October 7, 2004, through a public announcement called the “Acto de Fe por la Paz.” Since the start of the Uribe administration in August 2002 through December 31, 2014, 29,049 members of illegal armed groups, including paramilitary organizations, have been demobilized.
Justice and Peace Law
On July 25, 2005, then President Uribe approved Law 975 of 2005, known as the Justice and Peace Law, which constitutes the legal framework for future peace talks. This law allows members of illegal groups to demobilize in an individual or collective way, and offers the potential for reduced sentencing and prison terms if the individuals confess their crimes. In 2007, the AUC continued to demobilize under the Justice and Peace Law. More than 32,000 AUC members have demobilized since the Justice and Peace Law became effective in 2005. In December 2006, the Colombian prosecutor’s office began taking sworn confessions from ex-members of the AUC as part of the process under the Justice and Peace Law. In 2006, out of 31,671 demobilized paramilitaries, 3,127 were eligible to receive benefits under the Justice and Peace Law. The Government believes that a number of paramilitary organizations had been dismantled since June 2008. Although some AUC members may have regrouped into criminal organizations after demobilization, the AUC as a formal organization largely has ceased to function.
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On December 4, 2007, the Government presented to the Peace Commission within the Chamber of Representatives a draft decree which would grant FARC members the benefits of a humanitarian agreement within the framework of the Justice and Peace Law. In this connection, the draft would authorize a conditional suspension of sentences for the members of rebel groups that demonstrate a willingness to continue in the peace process. On April 4, 2008, Decree No. 1059 was passed pursuant to which FARC members that have been detained may at any time demobilize and receive benefits under the law. On December 13, 2010, Decree No. 1059 of 2008 was repealed by Decree No. 4619 of 2010, which makes a requirement for the authorities to investigate the criminal situation of any applicant for demobilization.
Project for Democratic Security
In 2002, the Uribe administration announced a program, called the Project for Democratic Security, which sought to eradicate the guerilla and paramilitary groups and provide security for all, without discrimination against aggressors. To that end, the Government established a voluntary civilian informant network to combat the insurgent groups. Among other objectives, the Project for Democratic Security also sought to:
| • | eliminate obligatory military service once the armed forces have expanded to include 100,000 career soldiers, and thereafter replace conscription with national service for men and women; |
| • | pass anti-terrorism legislation; |
| • | increase penalties for crimes and improve the justice system; and |
| • | support and improve the Plan Colombia, the government peace initiative conceived during the Pastrana administration. |
President Santos’s national development plan during his first term in office, “Prosperity for All,” sought to continue the internal security policy of the Project for Democratic Security of the previous administration.
In February 2007, Colombia’s “Strategy for Strengthening Democracy and Promoting Social Development” was developed as a mechanism to improve some factors of the Plan Colombia. The main purpose of this strategy was to consolidate the achievements in security for all citizens, peace, development, and war on poverty through five components: war on terrorism and drug trafficking, strengthening justice and promoting human rights, opening markets, comprehensive social development, comprehensive attention to displaced persons and demobilization, laying down weapons, and reintegration. The strategy ended in December 2013.
On June 10, 2011, President Santos signed into law a Victims Law that aims to compensate victims of the internal conflict since 1985. The law, which uses international standards and principles, has the objective of assuring land restitution and economic compensation for the victims of the internal conflict through the support of different state institutions. The law will be effective for ten years and could be extended by the Congress.
Since the “Strategy for Strengthening Democracy and Promoting Social Development” concluded in 2013, President Santos announced in May 8, 2014 ten proposals for his administration’s plan of Seguridad Ciudadana for the 2014-2018 period, which contemplates the creation of a ministry of public security, an increase of 25,000 policemen and the activation of 15 metropolitan police forces, in addition to the creation of elite forces or groups specializing in combating crimes such as theft of cell phones, extortion, kidnapping, smuggling and illegal mining. The president also reiterated that his administration will continue working for peace with the FARC.
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Criminal Activity
The level of criminal activity has generally shown a decreasing trend since the Uribe administration took office in August 2002. In particular, violence by guerilla organizations has generally decreased. Incidents of homicide increased from 15,459 in 2010 to 16,127 in 2011 and 16,440 in 2012, but decreased in 2013 15,419 and by 14.0% to 13,258 in 2014. Incidents of kidnapping increased from 282 in 2010 to 305 in 2011, but remained constant in 2012. Incidents of kidnapping decreased from 299 in 2013 to 288 in 2014. Incidents of terrorism increased from 472 in 2010 to 571 in 2011, and 894 in 2012. Incidents of terrorism decreased from 890 in 2013 to 764 in 2014. There can be no assurance, however, that the level of criminal activity will continue to be the same in the future. The Government has taken various steps to combat the activities of producing, processing and trafficking in narcotics and the violence and terrorism that have become associated with such activities since the mid-1980s. Among other measures, the Government has offered bounties for information leading to the capture of certain criminals, increased its spending on military and police forces and improved the effectiveness of the judicial system, in part through raising the salaries of, and providing greater personal security to, judges and prosecutors.
Colombia is also a party to the United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances. Other components of the Government’s anti-drug program include the following policies:
| • | eradicating illicit crops; |
| • | controlling the raw materials necessary to process coca; |
| • | providing an alternative livelihood for small coca growers through subsidies and other means; |
| • | destroying drug processing and distribution operations; and |
| • | arresting and prosecuting drug traffickers. |
From January to December 2014, 55,532 hectares of illicit cocaine crops were sprayed as compared to 47,052 hectares during the same 12 month period ended December 2013.
According to the United Nations Office on Drugs and Crime’s (UNODC) coca crop survey published in July 2015, both the country’s cultivation area and cocaine production increased substantially in 2014 compared to the previous year. The net coca cultivation area was up 44% year-over-year from 48,000 hectares in 2013 to 69,000 in 2014, while the potential cocaine production, rose from 290 to 442 metric tons in the same period representing a 52% increase. The 2015 survey indicates that while the cultivation area of coca bush decreased in some Colombian regions (Amazon, Orinoco and Sierra Nevada), it rose in others (Pacific, Central, Putumayo-Caquetá and Meta-Guaviare). In the latter, coca crops grew strongly in two national parks, namely La Macarena and Nukak. The presence of coca also increased in Afro-Colombian and indigenous areas. A noteworthy regional increase in coca cultivation area took place in the Putumayo-Caquetá region, which saw a growth of 68 per cent - increasing from 12,000 hectares to more than 20,000 hectares - while the region with the biggest cultivated area, the Pacific, registered an increase of 40%, from close to 18,600 hectares to almost 26,000 hectares. Law 793 of 2002 permits the Government to initiate judicial proceedings to acquire assets obtained through illicit means or used in the furtherance of illegal activities. In 1997, the Constitution was amended to permit extradition of Colombian citizens accused of criminal activity abroad. Although drug trafficking activities and acts of violence and terrorism continue to occur, in the recent past the Government has been successful in largely dismantling the “Cali” and “Medellín” cartels.
Decree 472, enacted in 1996, created the Plan Nacional de Desarrollo Alternativo (National Plan of Alternate Development). It seeks to remove, voluntarily, peasants and indigenous communities from activities related to the cultivation of illicit drug crops, through the introduction of sustainable and competitive alternative livelihoods for them. The plan is currently established in 96 Colombian municipalities. In an effort to improve the plan’s results, the Uribe administration announced in 2003 a program called “Familias Guardabosques” with the aim of paying 51,000 peasant families Ps. 3.6 million per
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year to cease cultivating illicit drug crops and instead assist in the restoration of national forests. From 2003 to 2011, 122,991 families have been linked to the program. In this period, the Government has invested Ps. 1.1 billion to the program. During 2012, 2013 and 2014, the number of families added to the program were 14,874, 13,643 and 6,684, respectively. Families received economic incentives of a total of Ps. 11.8 billion in 2012, Ps. 19.7 billion in 2013 and Ps. 10.1 billion in 2014.
The United States provides assistance to Colombia to support its efforts to combat illegal drug-related activities. The aid package to Colombia in July 2000 included American-supplied helicopters and U.S. military trainers to assist Colombia in its anti-drug operations. In August 2002 the U.S. President signed anti-terrorism legislation that, in a policy shift, authorized Colombia to use the military equipment and U.S.-trained Colombian soldiers directly against the rebels and paramilitary groups. In 2010, the United States provided Colombia with $434.2 million for military and police assistance and $248.2 million for economic and social assistance programs. In 2011, the United States provided Colombia with $341.1 million for military and police assistance and $213.5 million for economic and social assistance programs. In 2012, the United States provided Colombia with $246.9 million for military and police assistance programs and $197.0 million for economic and social assistance programs. In 2013, the United States provided Colombia with $217.1 million for military and police assistance programs and $195.9 million for economic and social assistance programs. In 2014, the United States provided Colombia with $203.1 million for military and police assistance programs and $170.7 million for economic and social assistance programs. Colombian government programs that have received U.S. aid include the Colombia National Police Project, the Colombia Military Project, the Narcotics Interdiction Project, the Alternative Development Program, the Democracy Project, the Vulnerable Groups Project, the Promotion of the Rule of Law Project and the Program of Development and Support. In addition, in August 2003, the U.S. President authorized the U.S. Department of State to resume assistance to Colombia in implementing an “Airbridge Denial Program” against civil aircraft suspected of trafficking in narcotics. The previous interdiction program was suspended in April 2001.
On October 30, 2009, the Government signed an agreement of cooperation and technical assistance on defense and security with the United States which included, among other provisions, the use by the United States of seven military bases in Colombia for drug interdiction. The Government, working under the assumption that such agreement was only a complement of other bilateral and multilateral cooperation agreements signed between Colombia and the United States, believed that the agreement would be effective without approval of Congress and without review by the Constitutional Court. After the agreement was signed, however, certain Colombian citizens filed a petition before the Constitutional Court claiming that the agreement was invalid because it was subject to the formal approval procedure for international treaties. On August 17, 2010, the Constitutional Court held that the agreement was in the nature of an international treaty and as such was subject to the formal procedure of approval by Congress and declared the agreement without effect under Colombian law until Congress follows the required procedures. The Government accepted the Constitutional Court’s decision and has not announced any plans to present the agreement to Congress.
The United States, however, conditions its assistance on the periodic determination as to the effectiveness of Colombia’s efforts. On September 15, 2005, pursuant to U.S. law requirements, the President of the United States issued a presidential determination listing the 20 nations deemed to be major drug transit or major illicit drug-producing countries for fiscal year 2006. Although Colombia was included in the “major list,” the President of the United States determined that Colombia did not “fail demonstrably” during the previous 12 months to make substantial efforts to adhere to international counternarcotics agreements and take certain counternarcotics measures set forth in U.S. law. The White House Office of National Drug Control Policy and the Bureau for International Narcotics and Law Enforcement Affairs have highlighted the great progress made by Colombia in fighting drug-crop cultivation and drug trafficking. As long as the Annual Presidential Determinations for Major Illicit Drug Producing and Drug-Transit Countries is released by the U.S. Department of State, there will be an evaluation of whether Colombia is a member of the “majors list”. As of September 15, 2014. Colombia remained on the “majors list” for United States’ fiscal year 2015, but is still considered certified by the President of the United States, due to the substantial efforts of the Government to adhere to its obligations under international counter narcotics agreements. In the event of a future decertification of Colombia, unless the U.S. President waives the effects that a decertification would have under U.S. law, all United States assistance (other than certain counternarcotics and humanitarian assistance) to Colombia would be suspended and the United States would be obligated to vote against all
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loans and other assistance to Colombia by multilateral development banks. In addition, the United States could, but would not be obligated to, impose economic sanctions on Colombia, such as the withdrawal of certain trade preferences. The decertification of Colombia in 1996, 1997 and 1998 did not have a material adverse effect on the country, but no assurance can be given that a future decertification would not have this effect. On August 3, 2005, the U.S. Department of State announced that Colombia had met the criteria related to human rights set forth by the United States, which certification has not been withdrawn. These certifications ensure continued aid from the United States. Various other countries have programs to provide assistance to Colombia to reduce illegal drug-related activities.
The Government anticipates that continued large expenditures on security and justice will be necessary over the medium term to fight narcotics-related crime. The Government has in the past funded a portion of its increased security and justice expenditures through special taxes imposed on certain sectors, such as the petroleum industry. No official studies have been published regarding, and private studies vary widely in their assessment of, the effect on the Colombian economy of narcotics trafficking and drug-related violence, including their effect on Colombia’s balance of payments, foreign investment flows and the allocation of productive activity. See “Foreign Trade and Balance of Payments—Foreign Investment.”
Other Domestic Initiatives
On December 26, 2012, President Santos signed Law 1607, which modifies the Colombian tax regime. This reform is revenue neutral, and its primary objectives are the creation of new jobs and the reduction of inequalities. For those purposes, the reform modifies the income tax rates for wage earners, which are now progressive and sets a National Alternative Minimum Tax - IMAN in order to limit the exemptions and deductions taken by individuals on their income tax. The reform also reduces the nonwage costs (payroll taxes, health and pensions) for firms with the aim of boosting formal employment, reduces the general income tax rate to 25% from 33% and creates a new tax for firms called Impuesto Sobre la Renta Para la Equidad - CREE (Business Contribution to Equality). Other relevant points of the reform are the reduction in value-added tax (“VAT”) rates in order to simplify tax rates, leaving three different rates versus the previous seven, the reduction of the withholding tax to foreign investors in the local market from 33% to 15% and the inclusion of measures against tax evasion and tax avoidance. The result of the implementation of this reform contributed to a reduction in the unemployment rate during 2013, particularly in the agricultural and industrial sectors, and in maintaining a low level of inflation through the reduction in indirect taxes on various goods and services such as fuel, vehicles and food items.
On December 23, 2014, President Santos signed Law 1739 of 2014. The law seeks to maintain the growth of the Colombian economy through infrastructure development and social programs and strike a balance between taxes on wealth and income without adversely affecting the middle class or small and medium size companies. The key provisions of the tax law include: (i) a temporary wealth tax on those with net assets above Ps. 1 billion effective as of January 1, 2015; (ii) a permanent increase on the CREE from 8% to 9%, starting in 2015; (iii) a temporary income tax surcharge of the CREE for a company’s earnings above Ps.800 million, such surcharge will be 5% for 2015, 6% for 2016, 8% for 2017 and 9% for 2018; (iv) postponing the elimination of the tax on financial transactions, the Gravamen a los Movimientos Financieros –GMF, to 2019, at which point it will gradually be reduced by 1 point each year until its elimination in 2022; (v) a tax deduction for investments in innovation; (vi) extending a subsidy in energy services (gas and electric) for the poor; and (v) creating a Tax Expert Commission, Comisión de Expertos para la Equidad y la Competitividad Tributaria, which will propose reforms to make the Colombian tax system more equitable and efficient. The tax reform took effect on January 1, 2015.
On May 30, 2011, the “Mercado Integrado Latinoamericano” (MILA) began its operations. This project involves the integration of technology platforms of the Colombian, Chilean and Peruvian stock markets. The MILA, allows investors to carry out cash transactions on investments in shares listed in the Bolsa de Valores de Colombia (BVC), Bolsa de Comercio de Santiago (BCS) and Bolsa de Valores de Lima (BVL), involving the three securities depositaries, DECEVAL (Déposito Centralizado de Valores de Colombia), CAVALI (Registro Central de Valores y Liquidaciones) and the Central Securities Depository (CSD) of Colombia, Peru and Chile, respectively. The main objective of the integration is to develop the capital markets by offering to investors a wider range of securities and to issuers larger funding sources. In the long term, the creation of MILA is expected to diversify, expand and improve the attractiveness of trading of
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securities in the three countries for both domestic and international investors. On June 19, 2014, the Bolsa Mexicana de Valores (BMV) became a member of MILA As of December 31, 2014 the market capitalization of the MILA was $987.8 billion compared to $602.0 billion in December 2013, an increase of 64.1%. As of December 31 2014, the year to date traded volume was $246.6 billion.
In July 2008, the Constitutional Court issued a decision requiring the Government to undertake a series of remedial actions regarding the current health system. These actions were to be carried out on a timetable proposed by the Government that would fulfill the obligation to equalize the benefits under the Plan Obligatorio de Salud (POS), a compulsory health insurance system for individuals that are formally employed or earn more than twice the minimum wage, and the Plan Obligatorio de Salud Subsidiado (POSS), a subsidized health plan. In December 2009, the Government declared a state of social emergency, which allows the President to issue decrees solely related to the state of emergency and temporarily suspend laws incompatible with the state of emergency. In January 2010, the President issued a set of decrees in order to comply with the Constitutional Court decision. On April 16, 2010, the Constitutional Court declared the state of emergency and the decrees issued under it unconstitutional. On July 12, 2010, the President signed the Health Resources Law. This law ensures additional resources for the health system by between Ps. 3.5 and Ps. 3.6 trillion. The principal provisions of the law are : (i) an increase in value added tax rates for beer, cigars, gambling and liquor; (ii) the authorization to use transfers from the Government to the departments and municipalities to equalize the benefits under Plan Obligatorio de Salud and Plan Obligatorio de Salud Subsidiado; and (iii) implementation of measures that are intended to reduce evasion and avoidance of the required contributions to the health system. On January 19, 2011, the President signed into law the Health Reform Law that provides more resources to the health system (Ps.1.5 trillion per year). The Government will contribute Ps.1.0 trillion from the national budget and other resources are expected to come from the Family Compensation Funds (a non-governmental agency that pays social security subsidies), municipalities and departments, among others. The law will also order periodic updates to the public health insurance plans in order to make them consistent with the epidemiological profile of the population, limiting and rationalizing the type of treatments and drugs that are included in the insurance plans.
On February 16, 2015, President Santos and Health Minister, Alejandro Gaviria, signed Law 1751, which establishes health as an autonomous fundamental right. Under the law, the provision of emergency services becomes mandatory, eliminating any requirement for authorization prior to treatment. The law also provides that administrative or economic reasons cannot interrupt a patient’s care. Additionally, it establishes a cap on medicine prices based on international reference prices.
On June 9, 2015, the Law 1753 was approved by Congress and through which the Government has implemented the National Development Plan (“PDN”) for the period 2014 to 2018. The three main pillars of the PDN are (i) peace, reflecting the Government’s political will to commit to sustainable peace; (ii) equity, in order to focus in human development with opportunities for all; and (iii) education, which the plan considers as the most powerful instrument for social equality and economic growth. Additionally, there are five cross strategies that are meant to implement the three pillars: (i). competitiveness and strategic infrastructure; (ii). social mobility; (iii). transformation of the country side (which includes initiatives on land access and distribution and improving the social-economic condition of those living in rural areas); (iv) security, justice and democracy for peace building; and (v) good governance. Additionally, there is an evolving strategy, green growth, which includes as objectives the growth of sustainable development, lowering of carbon emissions, protecting the environment and planning for natural disasters and the effects of climate change.
Foreign Affairs and International Organizations
Colombia has established diplomatic relationships with 186 countries. Colombia is a member of the United Nations, the IMF and the International Bank for Reconstruction and Development (the “World Bank”). On a regional level, Colombia is a member of the Organization of American States (OAS), the Organization of Caribbean States, the Inter-American Development Bank (“IADB”), the Caribbean Development Bank, the Latin American Economic System, the Association of Caribbean States, the Economic Commission for Latin America, Unión de Naciones Suramericanas and the Caribbean, Corporación Andina de Fomento, a multilateral development bank referred to as CAF, the Andean Parliament and the Andean Development Bank. Colombia is also a party to several trade and commodity agreements, including the Andean Community of Nations (formerly known as the Andean Pact), the Latin American
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Integration Association, the Union of Banana Exporting Countries, the International Sugar Association and the World Trade Organization. Colombia also has free trade agreements with the United States, Canada, Mexico, Chile, El Salvador, Guatemala, Honduras Switzerland, Norway, Iceland and Liechtenstein, Venezuela, Peru and the European Union.
On May 30, 2013, the 34 member countries of the Organization for Economic Co-operation and Development (OECD) invited Colombia to initiate the accession process to the OECD. On September 19, 2013, the OECD approved a roadmap for the Colombia’s accession, establishing the process and setting the terms for future membership. Colombia has committed to cooperate with OECD committees in areas such as investment; bribery in international commercial transactions; corporate governance; financial markets; insurance and private pensions; competition; taxes; environment; public governance; regulatory policy; regional development; statistics; economy; education; employment, labor and social affairs; health; trade; export credits; agriculture; science and technology; information technology and communications; among other areas.
On January 27, 2015, during a meeting in the Colombian embassy in Paris with President Santos, the OECD Secretary General, Angel Gurría, delivered a document entitled “Colombia, political priorities for inclusive development”, which aims to promote stronger, more inclusive and sustainable growth. The document includes recommendations on agricultural, environmental, information technology, communications, education and health matters. President Santos confirmed that those recommendations will be included, to the extent possible, into the PDN.
The Andean Community of Nations, referred to herein as the Andean Community, which was designed to create a five-nation free-trade zone, was revived in 1991. Pursuant to this agreement, Colombia, Venezuela (but, as disclosed below, Venezuela later announced its intention to withdraw from the Andean Community), Peru, Ecuador and Bolivia implemented common external tariffs in 1995. In August 1997, the Andean Community members initiated a program to reduce the common external tariffs by 2005. In 2002, the Andean Community approved a new common external tariff that was scheduled to take effect on May 10, 2004. The Commission of the Andean Community decided to postpone, on several occasions, the initial effective date of the common external tariff due to the lack of agreement among members on the time frame and the criteria to apply to the common external tariff. Through Decision 535, the Commission of the Andean Community suspended the effective date of the common external tariff that was initially set for January 31, 2007 until July 20, 2008. Since July 2, 2008, the Andean Community Commission has enacted several decisions suspending the application of Decision 535, the latest of which, Decision 771, suspends the application of the common external tariff until December 31, 2014. Through Decision 805, issued on April 24, 2015, the Commission of the Andean Community suspended Decision 535 in its entirety and those decisions that modify, complement and replace Decision 535.
Since 1995, Colombia had also been a party to a trade pact with Venezuela and Mexico. On April 22, 2006, Venezuela formally announced its intention to withdraw from the Andean Community and, in May 2006, Venezuela announced its withdrawal from the trade pact with Mexico and Colombia. On August 9, 2006, Venezuela signed with the member countries of the Andean Community a Memorandum of Understanding which gives effect to the existing common external tariffs among the Andean Community. See “Foreign Trade and Balance of Payments—Foreign Trade—Geographic Distribution of Trade.”
On April 5, 2004, the Andean Community concluded a free trade agreement with Mercosur, the free trade association formed by Argentina, Brazil, Paraguay and Uruguay. This agreement, which was reached at a summit of the two trading blocks in July 2004, created a South American free trade area, which is expected to encourage positive economic benefits for the entire region. On October 18, 2004, an economic agreement was signed among Argentina, Brazil, Paraguay and Uruguay, each members of Mercosur, and the governments of Colombia, Ecuador and Venezuela, then members of the Andean Community. On August 3, 2005, another economic agreement was signed among Mexico, Venezuela and Colombia to promote trade among the parties, increase opportunities for investment, protect intellectual property rights and promote an environment of fair competition among the parties. In July 2006, Venezuela signed a Protocol of Adhesion to join Mercosur. Venezuela gained full membership in Mercosur on July 31, 2012. On September 20, 2006, Chile was granted the status of Associate Member Country of the Andean Community.
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On July 22, 2010, the Colombian permanent representative to the OAS alleged before the OAS permanent council that illegal armed groups from Colombia were present in Venezuelan territory. The allegation was rejected by the Venezuelan permanent representative and a disruption in the diplomatic relations with Colombia was declared by Venezuela.
On August 10, 2010, after a meeting held in Santa Marta, Colombia, President Santos and President Chavez announced the reestablishment of diplomatic and commercial relations between the two countries. In a joint declaration, the presidents announced the creation of five bilateral commissions for the review of the following issues: trade and debt of Venezuela with Colombian exporters; economic cooperation; social investment in their frontiers; joint infrastructure development; and security. For further discussion of trade relations between Colombia and Venezuela, please see “Foreign Trade and Balance of Payments—Foreign Trade.”
On August 22, 2015, President Nicolás Maduro of Venezuela declared a state of emergency in certain parts of the border with Colombia and closed them due to alleged violence and smuggling. Certain Colombians who had been living in Venezuela in the areas affected by the state of emergency have been deported. On August 23, 2015 Colombia reiterated its willingness to cooperate with Venezuela, in order to deepen the joint bilateral commitment against smuggling. The permanent council of the OAS held an extraordinary meeting on August 31, 2015 in order to attend to a request made by the permanent mission of Colombia to convene a meeting to consider the humanitarian situation faced by Colombians during recent deportations by Venezuela in connection with the state of emergency. Of the 18 votes needed to convene such a meeting, 17 votes were obtained, 4 voted against and 11 abstained. Accordingly, no resolution was passed.
In October 2002, Colombia became eligible to participate in the Andean Trade Promotion and Drug Eradication Act, or ATPDEA, a U.S. law that extended the unilateral tariff preferences accorded the Andean countries through the Andean Trade Preference Act to certain new products, such as apparel made with regional fabrics, footwear, leather goods, petroleum and watches. In 2009, Colombian exports to the United States through ATPDEA totaled approximately $5.9 billion, a decrease of 23.4% compared with exports in the amount of $7.7 billion in 2008. In 2010, Colombian exports increased to $9.8 billion from $5.6 billion in 2009. The main products exported to the United States through ATPDEA were oil and flowers. The exports of oil fuel and crude totaled approximately $6.7 billion, showing an increase of 42.9% compared to 2009. On February 12, 2011, the privileges under the ATPDEA lapsed but were reauthorized, retroactively, on October 21, 2011 for eligible countries, such as Colombia and Ecuador. Colombia is no longer an eligible beneficiary country under the ATPDEA as of May 15, 2012, when the United States-Colombia free trade agreement entered into force. The ATPDEA expired on July 31, 2013. For a further discussion of this legislation, see “Foreign Trade and Balance of Payments—Foreign Trade.”
On February 27, 2006, the United States and Colombia concluded negotiations on a free trade agreement that seeks to eliminate tariffs and other barriers to goods and services and expand trade between the two countries. Following the expiration of the ATPDEA, the Government concentrated its efforts on obtaining final approval for the free trade agreement by the U.S. Congress after having obtained approval by the Colombian Congress in June 2007. In April 2011, Colombia developed a “Plan Nacional de Acción” or “National Plan of Action” that contains provisions to address issues raised by the U.S. Congress relating to, among others, worker protections and workers’ rights. See “Foreign Trade and Balance of Payments—Foreign Trade—Geographic Distribution of Trade.”
On October 12, 2011, the Congress of the United States approved the free trade agreement between Colombia and the United States, which President Obama signed into law on October 21, 2011. The implementation phase in Colombia was intended to verify that the agreement is consistent with Colombia’s legal system. Thereafter, the two governments exchanged diplomatic notes at the Summit of the Americas in Cartagena, and the free trade agreement entered into force on May 15, 2012.
On June 6, 2012 Colombia, Chile, Mexico and Perú signed the framework agreement “Acuerdo de la Alianza del Pacífico” of the Pacific Alliance and on February 10, 2014, the same countries signed framework protocols, which were approved in Colombia by Law 1721 of 2014 and Law 1746 of 2014, respectively. The Pacific Alliance is a regional integration mechanism, which has as its objective for member states to create attractive integrated markets and to provide greater international competitiveness.
D-19
ECONOMY
Gross Domestic Product
Real GDP grew by 4.0%, 6.6% and 4.0% in 2010, 2011 and 2012, respectively, and, based on preliminary figures, grew by 4.9% in 2013 and 4.6% in 2014.
The following factors contributed to the positive growth in 2014:
| • | increased public consumption at an annual rate of 6.2% as compared to 2013 and investment in housing and civil works; |
| • | increased private consumption at an annual rate of 4.4% as compared to 2013 due to higher consumer confidence as unemployment decreased and quality of employment improved; |
| • | high activity in the construction sector and in the retail, restaurants and hotels and financial services subsectors; and |
| • | Government stimulus policies and favorable liquidity conditions, credit availability and low interest rates. |
These factors outweighed the performance of the mining and manufacturing sectors during the year, which was irregular due to weak external demand and increased international competitiveness.
The services sector has traditionally been the largest sector of the Colombian economy. In 2014, the services sector increased by 4.9% in real terms and represented 54.3% of GDP. The manufacturing sector increased by 0.2% in real terms in 2014 and represented approximately 11.1% of GDP in 2014. Agriculture, livestock, fishing, forestry and hunting have also traditionally played an important role in the Colombian economy. Production in this sector increased by 2.3% in real terms in 2014, and the sector accounted for 6.1% of GDP in 2014. Construction activity grew by 9.9% in real terms in 2014 and accounted for 7.2% of GDP in 2014. Mining (including oil), decreased by 0.2% in real terms in 2014 and represented 7.3% of GDP in 2014. Electricity, gas and water grew by 3.8% in real terms in 2014 and represented 3.5% of GDP in 2014.
Gross fixed public investment, which represented 7.5% of 2014 GDP, registered a 4.7% increase in real terms in 2014, following a 10.4% increase in 2013. Gross fixed private investment, which represented 21.6% of GDP in 2014, increased by 13.3% in real terms in 2014 as compared to a 4.5% increase in real terms in 2013. In 2014, public consumption, which represented 17.4% of 2014 GDP, increased by 6.2% in real terms, following an increase of 9.2% in 2013. Private consumption grew by 4.4% in real terms in 2014, following positive real growth of 3.8% in 2013, and accounted for 64.7% of 2014 GDP.
According to preliminary figures, real GDP grew 2.8% during the first quarter of 2015 over the same quarter of 2014. According to preliminary figures, during the first quarter of 2015, the sectors that experienced the greatest real growth over the same quarter of 2014 were construction (4.5%), agriculture, livestock, fishing, forestry and hunting (3.5%) and mining (1.9%).
Impact of Oil Prices
The mining sector (including oil) is a significant contributor to the Colombian economy and is a principal source of exports. Activity related to oil accounted for 5.5% of GDP in 2013 and -0.2% of GDP in 2014, while oil and its derivatives accounted for 55.2% of total exports in 2013 and 53.1% of total exports in 2014. On June 13, 2015, the Government published its medium-term fiscal framework, which reflects the Government’s expectation that the fall in oil prices will result in a shortfall in oil revenues of approximately 1.4% of GDP as compared to 2014 and an increase in the Central Government fiscal deficit to 3.0% of GDP in 2015. The Government anticipates that the balance can be financed within the fiscal responsibility law through a higher cyclical deficit. See “Public Sector Finance—General” for more information on the results of a review of the Government’s financial plan for 2015 and the impact of oil prices.
D-20
The following tables set forth real GDP and demand as well as the composition and annual percentage growth rates of real GDP and demand, for the five years ended December 31, 2014.
Real GDP and Demand
| 2010 | 2011 | 2012 | 2013(1) | 2014(1) | ||||||||||||||||
| (millions of constant 2005 pesos) | ||||||||||||||||||||
| GDP |
Ps. | 424,599,000 | Ps. | 452,578,000 | Ps. | 470,880,000 | Ps. | 494,124,000 | Ps. | 516,619,000 | ||||||||||
| Add: Imports of Goods and Services |
97,260,000 | 118,158,000 | 128,880,000 | 137,089,000 | 149,646,000 | |||||||||||||||
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| Total Supply of Goods and Services |
521,903,000 | 567,944,000 | 595,498,000 | 626,300,000 | 659,165,000 | |||||||||||||||
| Less: Exports of Goods and Services |
68,398,000 | 76,438,000 | 81,016,000 | 85,342,000 | 83,901,000 | |||||||||||||||
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| Total Domestic Supply |
Ps. | 453,505,000 | Ps. | 491,506,000 | Ps. | 514,482,000 | Ps. | 540,958,000 | Ps. | 575,264,000 | ||||||||||
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| Allocation of Domestic Demand Consumption |
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| Private Consumption |
Ps. | 278,848,000 | Ps. | 295,516,000 | Ps. | 308,471,000 | Ps. | 320,331,000 | Ps. | 334,269,000 | ||||||||||
| Public Consumption |
70,366,000 | 72,881,000 | 77,473,000 | 84,605,000 | 89,877,000 | |||||||||||||||
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| Total Consumption |
349,303,000 | 368,399,000 | 386,023,000 | 405,299,000 | 424,447,000 | |||||||||||||||
| Gross Fixed Investment(2) |
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| Private Investment(1) (3) |
77,028,588 | 88,149,513 | 94,454,761 | 98,689,804 | 111,809,597 | |||||||||||||||
| Public Investment(1) (3) |
25,750,412 | 34,127,487 | 33,625,239 | 37,137,196 | 38,883,403 | |||||||||||||||
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| 102,779,000 | 122,277,000 | 128,080,000 | 135,827,000 | 150,693,000 | ||||||||||||||||
| Changes in Inventory |
1,568,000 | 1,340,000 | 1,352,000 | 224,000 | 1,250,000 | |||||||||||||||
| Total Domestic Demand |
Ps. | 521,903,000 | Ps. | 567,944,000 | Ps. | 595,498,000 | Ps. | 626,300,000 | Ps. | 659,165,000 | ||||||||||
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Totals may differ due to rounding,
| 1: | Preliminary figures. |
| 2: | Investment is defined as gross fixed capital formation plus changes in inventory. |
| 3: | Information compiled from macroflows calculated by the General Directorate of Macroeconomic Policy – Ministry of Finance and Public Credit. |
| Source: | DANE. |
D-21
| Percentage of GDP(1)(4) | Real Growth Rate(1)(4) | |||||||||||||||||||||||||||||||||||||||
| 2010 | 2011 | 2012 | 2013(2) | 2014(2) | 2010 | 2011 | 2012 | 2013(2) | 2014(2) | |||||||||||||||||||||||||||||||
| GDP |
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100 | % | 4.0 | % | 6.6 | % | 4.0 | % | 4.9 | % | 4.6 | % | ||||||||||||||||||||
| Add: Imports of Goods and Services |
22.9 | % | 26.1 | % | 27.4 | % | 27.7 | % | 29.0 | % | 10.8 | % | 21.5 | % | 9.1 | % | 6.4 | % | 9.2 | % | ||||||||||||||||||||
| Total Supply of Goods and Services |
122.9 | % | 126.1 | % | 127.4 | % | 127.7 | % | 129.0 | % | 4.9 | % | 8.6 | % | 4.8 | % | 5.0 | % | 5.3 | % | ||||||||||||||||||||
| Less: Exports of Goods and Services |
16.1 | % | 16.9 | % | 17.2 | % | 17.3 | % | 16.2 | % | 1.3 | % | 11.8 | % | 6.0 | % | 5.3 | % | (1.7 | )% | ||||||||||||||||||||
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| Total Domestic Supply |
106.8 | % | 108.6 | % | 109.3 | % | 109.5 | % | 111.4 | % | 5.6 | % | 8.4 | % | 4.7 | % | 5.1 | % | 6.3 | % | ||||||||||||||||||||
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| Allocation of Domestic Demand(3) |
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| Consumption |
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| Private Consumption |
65.7 | % | 65.3 | % | 65.5 | % | 64.8 | % | 64.7 | % | 5.0 | % | 6.0 | % | 4.4 | % | 3.8 | % | 4.4 | % | ||||||||||||||||||||
| Public Consumption |
16.6 | % | 16.1 | % | 16.5 | % | 17.1 | % | 17.4 | % | 5.6 | % | 3.6 | % | 6.3 | % | 9.2 | % | 6.2 | % | ||||||||||||||||||||
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| 82.3 | % | 81.4 | % | 82.0 | % | 82.0 | % | 82.2 | % | 5.1 | % | 5.5 | % | 4.8 | % | 5.0 | % | 4.7 | % | |||||||||||||||||||||
| Gross Fixed Investment |
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| Private Investment(5) |
18.1 | % | 19.5 | % | 20.1 | % | 20.0 | % | 21.6 | % | 1.4 | % | 14.4 | % | 7.2 | % | 4.5 | % | 13.3 | % | ||||||||||||||||||||
| Public Investment(5) |
6.1 | % | 7.5 | % | 7.1 | % | 7.5 | % | 7.5 | % | 16.9 | % | 32.5 | % | (1.5 | )% | 10.4 | % | 4.7 | % | ||||||||||||||||||||
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| 24.2 | % | 27.0 | % | 27.2 | % | 27.5 | % | 29.2 | % | 4.9 | % | 19.0 | % | 4.7 | % | 6.0 | % | 10.9 | % | |||||||||||||||||||||
| Changes in Inventory |
0.4 | % | 0.3 | % | 0.3 | % | 0.0 | % | 0.2 | % | (238.9 | )% | (14.5 | )% | 0.9 | % | (83.4 | )% | 458.0 | % | ||||||||||||||||||||
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| Total Domestic Demand |
122.9 | % | 125.5 | % | 126.5 | % | 126.7 | % | 127.6 | % | 4.8 | % | 8.1 | % | 4.6 | % | 4.9 | % | 5.0 | % | ||||||||||||||||||||
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Totals may differ due to rounding.
| 1: | Calculated using constant 2005 pesos. |
| 2: | Preliminary figures. |
| 3: | Includes the purchase of goods made abroad by residents and excludes that of non-residents made in Colombia. |
| 4: | Information compiled from macroflows calculated by the General Directorate of Macroeconomic Policy – Ministry of Finance and Public Credit. |
| 5: | Investment is defined as gross fixed capital formation plus changes in inventory. Information compiled from macroflows calculated by the General Directorate of Macroeconomic Policy – Ministry of Finance and Public Credit. |
| Source: | DANE. |
D-22
Principal Sectors of the Economy
The following table sets forth the composition of Colombia’s GDP by economic sector, in constant pesos and percentage terms, for the five years ended December 31, 2014.
Real GDP by Sector
| 2010 | % of Total |
2011 | % of Total |
2012 | % of Total |
2013(1) | % of Total |
2014(1) | % of Total |
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| (millions of constant 2005 pesos and as a percentage of GDP) | ||||||||||||||||||||||||||||||||||||||||
| Agriculture, Livestock, Fishing, Forestry and Hunting |
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| Coffee |
Ps. | 2,623,000 | 0.6 | % | Ps. | 2,421,000 | 0.5 | % | Ps. | 2,386,000 | 0.5 | % | Ps. | 3,245,000 | 0.7 | % | Ps. | 3,568,000 | 0.7 | % | ||||||||||||||||||||
| Other Agriculture and Livestock |
23,414,000 | 5.5 | 24,222,000 | 5.4 | 24,927,000 | 5.3 | 25,830,000 | 5.2 | 26,405,000 | 5.1 | ||||||||||||||||||||||||||||||
| Fishing, Forestry and Hunting |
1,567,000 | 0.4 | 1,610,000 | 0.4 | 1,693,000 | 0.4 | 1,739,000 | 0.4 | 1,643,000 | 0.3 | ||||||||||||||||||||||||||||||
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| Total Agriculture |
27,720,000 | 6.5 | 28,295,000 | 6.3 | 29,005,000 | 6.2 | 30,943,000 | 6.3 | 31,642,000 | 6.1 | ||||||||||||||||||||||||||||||
| Manufacturing Industry |
54,065,000 | 12.7 | 56,631,000 | 12.5 | 56,677,000 | 12.0 | 57,041,000 | 11.5 | 57,181,000 | 11.1 | ||||||||||||||||||||||||||||||
| Mining(2) |
29,821,000 | 7.0 | 34,147,000 | 7.5 | 35,948,000 | 7.6 | 37,911,000 | 7.7 | 37,823,000 | 7.3 | ||||||||||||||||||||||||||||||
| Electricity, Gas and Water |
15,895,000 | 3.7 | 16,376,000 | 3.6 | 16,752,000 | 3.6 | 17,281,000 | 3.5 | 17,937,000 | 3.5 | ||||||||||||||||||||||||||||||
| Construction |
26,302,000 | 6.2 | 28,469,000 | 6.3 | 30,159,000 | 6.4 | 33,651,000 | 6.8 | 36,968,000 | 7.2 | ||||||||||||||||||||||||||||||
| Services |
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| Transportation, Storage and Communications |
31,369,000 | 7.4 | 33,455,000 | 7.4 | 34,757,000 | 7.4 | 36,000,000 | 7.3 | 37,494,000 | 7.3 | ||||||||||||||||||||||||||||||
| Retail, Restaurants and Hotels |
50,975,000 | 12.0 | 54,400,000 | 12.0 | 56,523,000 | 12.0 | 59,079,000 | 12.0 | 61,785,000 | 12.0 | ||||||||||||||||||||||||||||||
| Financial Services |
19,893,000 | 4.7 | 22,470,000 | 5.0 | 24,406,000 | 5.2 | 26,177,000 | 5.3 | 28,286,000 | 5.5 | ||||||||||||||||||||||||||||||
| Housing |
35,880,000 | 8.5 | 36,895,000 | 8.2 | 38,064,000 | 8.1 | 39,155,000 | 7.9 | 40,369,000 | 7.8 | ||||||||||||||||||||||||||||||
| Services to Companies except Financial Services and Housing |
27,018,000 | 6.4 | 28,923,000 | 6.4 | 30,315,000 | 6.4 | 31,755,000 | 6.4 | 33,283,000 | 6.4 | ||||||||||||||||||||||||||||||
| Public Administration and Defense |
36,783,000 | 8.7 | 37,555,000 | 8.3 | 39,332,000 | 8.4 | 41,911,000 | 8.5 | 44,523,000 | 8.6 | ||||||||||||||||||||||||||||||
| Education |
7,695,000 | 1.8 | 7,934,000 | 1.8 | 8,187,000 | 1.7 | 8,513,000 | 1.7 | 8,892,000 | 1.7 | ||||||||||||||||||||||||||||||
| Social and Health |
8,955,000 | 2.1 | 9,255,000 | 2.0 | 9,954,000 | 2.1 | 10,501,000 | 2.1 | 11,169,000 | 2.2 | ||||||||||||||||||||||||||||||
| Recreation, Cultural, Sports and Other Services |
9,323,000 | 2.2 | 10,005,000 | 2.2 | 10,311,000 | 2.2 | 11,057,000 | 2.2 | 11,494,000 | 2.2 | ||||||||||||||||||||||||||||||
| Domestic Services |
3,156,000 | 0.7 | 3,264,000 | 0.7 | 3,354,000 | 0.7 | 3,434,000 | 0.7 | 3,556,000 | 0.7 | ||||||||||||||||||||||||||||||
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| Total Services |
230,952,000 | 54.4 | 244,066,000 | 53.9 | 255,088,000 | 54.2 | 267,433,000 | 54.1 | 280,467,000 | 54.3 | ||||||||||||||||||||||||||||||
| Plus: Duties and Tariffs on Imports |
39,088,000 | 9.2 | 43,420,000 | 9.6 | 45,770,000 | 9.7 | 47,571,000 | 9.6 | 51,303,000 | 9.9 | ||||||||||||||||||||||||||||||
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| Real GDP |
Ps. | 424,599,000 | 100 | % | Ps. | 452,578,000 | 100 | % | Ps. | 470,880,000 | 100 | % | Ps. | 494,214,000 | 100 | % | Ps. | 516,619,000 | 100 | % | ||||||||||||||||||||
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Totals may differ due to rounding.
| 1: | Preliminary figures. |
| 2: | Includes petroleum. |
| Source: | DANE. |
D-23
The following table sets forth the annual change in Colombia’s real GDP by sector for the five years ended December 31, 2014.
Real GDP Growth by Sector(1)
| 2010 | 2011 | 2012) | 2013(2) | 2014(2) | ||||||||||||||||
| Agriculture, Livestock, Fishing, Forestry and Hunting |
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| Coffee |
11.0 | (7.7 | )% | (1.4 | )% | 36.0 | % | 10.0 | % | |||||||||||
| Other Agriculture and Livestock |
(1.0 | ) | 3.5 | 2.9 | 3.6 | 2.2 | ||||||||||||||
| Fishing, Forestry and Hunting |
0.1 | 2.7 | 5.2 | 2.7 | (5.5 | ) | ||||||||||||||
| Total Agriculture |
0.2 | 2.1 | 2.5 | 6.7 | 2.3 | |||||||||||||||
| Manufacturing Industry |
1.8 | 4.7 | 0.1 | 0.6 | 0.2 | |||||||||||||||
| Mining(3) |
10.6 | 14.5 | 5.3 | 5.5 | (0.2 | ) | ||||||||||||||
| Electricity, Gas and Water |
3.9 | 3.0 | 2.3 | 3.2 | 3.8 | |||||||||||||||
| Construction |
(0.1 | ) | 8.2 | 5.9 | 11.6 | 9.9 | ||||||||||||||
| Services |
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| Transportation, Storage and Communications |
6.2 | 6.6 | 3.9 | 3.6 | 4.2 | |||||||||||||||
| Retail, Restaurants and Hotels |
5.2 | 6.7 | 3.9 | 4.5 | 4.6 | |||||||||||||||
| Financial Services |
4.5 | 13.0 | 8.6 | 7.3 | 8.1 | |||||||||||||||
| Housing |
3.6 | 2.8 | 3.2 | 2.9 | 3.1 | |||||||||||||||
| Services to Companies except Financial Services and Housing |
3.1 | 7.1 | 4.8 | 4.8 | 4.8 | |||||||||||||||
| Public Administration and Defense |
4.3 | 2.1 | 4.7 | 6.6 | 6.2 | |||||||||||||||
| Education |
0.7 | 3.1 | 3.2 | 4.0 | 4.5 | |||||||||||||||
| Social and Health |
5.0 | 3.4 | 7.6 | 5.5 | 6.4 | |||||||||||||||
| Recreation, Cultural, Sports and Other Services |
2.5 | 7.3 | 3.1 | 7.2 | 4.0 | |||||||||||||||
| Domestic Services |
1.9 | 3.4 | 2.8 | 2.4 | 3.6 | |||||||||||||||
| Total Services |
4.3 | 5.7 | 4.5 | 4.8 | 4.9 | |||||||||||||||
| Plus: Duties and Tariffs on Imports |
6.6 | 11.1 | 5.4 | 3.9 | 7.8 | |||||||||||||||
| Real GDP |
4.0 | 6.6 | 4.0 | 4.9 | 4.6 | |||||||||||||||
Totals may differ due to rounding.
| 1: | Calculated using constant 2005 pesos. |
| 2: | Preliminary figures. |
| 3: | Includes petroleum. |
| Source: | DANE. |
Agriculture, Livestock, Fishing, Forestry and Hunting
Colombia’s tropical climate and range of altitudes are conducive to a wide variety of agriculture. Coffee, sugarcane, flowers, bananas, potatoes and plantains have traditionally been considered the most important products. In 2014, the combined sectors of agriculture (including coffee), livestock, fishing, forestry and hunting (the “total agriculture” sector) comprised, in the aggregate, 6.1% of total GDP. Total agriculture sector production increased by 2.3% in real terms in 2014, compared to a 6.7% increase in 2013. The non-coffee agricultural and livestock sector accounted for 5.1% of GDP in 2014, increasing by 2.2% in 2014, as compared to 3.6% real growth in 2013. In 2014, the fishing, forestry and hunting sector comprised 0.3% of GDP, decreasing by 5.5% in real terms, after a real increase of 2.7% in 2013.
Coffee production (excluding coffee processing) represented 0.7% of GDP in 2014, increasing by 10.0% in real terms, as compared with an increase of 36.0% in 2013.
The National Coffee Fund stabilizes domestic coffee prices. The fund is a trust account created by law for the primary purpose of stabilizing the coffee growers’ income by reducing the volatility caused by international prices. The fund is managed by the National Coffee Growers’ Committee, which is made up of representatives of coffee producers, the Minister of Finance and Public Credit, the Minister of Agriculture and Rural Development, the Minister of Commerce, Industry and Tourism and the Director of the National Planning Department. This committee, subject to the veto right by the Minister of Finance and Public Credit,
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periodically establishes an internal coffee price paid to local growers. To the extent that export prices, adjusted for transportation and insurance costs, exceed or fall below the established internal price for coffee, the National Coffee Fund accumulates a surplus or deficit. During 2010, the fund registered a fiscal deficit of Ps. 368 billion due to an increase of 14.5% in total expenses caused by higher commercial operation expenses in the form of coffee purchases. In 2011, the fund registered a fiscal surplus of Ps. 232 billion as a result of an increase in sales. In 2012, the fund registered a fiscal surplus of Ps. 37 billion, Ps. 196 billion lower than the fiscal surplus recorded in 2011 as a result of a decrease in sales volume and price. In 2013, the fund registered a fiscal deficit of Ps.106 billion due to lower volume of sales. In 2014, the fund registered a smaller fiscal deficit of Ps. 54.6 billion due to a Ps. 421 billion increase in revenues mainly due to an increase in other income and an increase in production. The weighted average price of coffee exported by Colombia decreased by 38.9% in 2014, from $1.48 per pound in 2013 to $0.91 per pound in 2014. Coffee exports accounted for 4.5% of total merchandise exports in 2014, as the volume of coffee exports increased by 15.0% in 2014, as compared to the volume exported in 2013. On August 2013, agricultural workers staged protests in remote areas and small towns, demanding more government support for agricultural production in light of the fall in international coffee prices. The Government, having expressed its willingness to enter into a dialogue with the protesters and its commitment to the agricultural sector, met with the protesters on August 22, 2013 to discuss their demands, issues of agricultural policy and the availability of financial instruments for agricultural sector support. However, in May 2014, agricultural workers again staged protests demanding better conditions. In May 9, 2014, the Government reached an agreement with the protesters ending the protests and promising to strengthen the ethnic and rural economy.
The Government developed a Ps. 100 billion credit line for the agricultural sector in 2000 through the use of new “agricultural reactivation funds.” Banco Agrario (the successor to the liquidated Caja Agraria) made disbursements of Ps. 2.9 trillion in 2010, Ps. 3.2 trillion in 2011, Ps. 4.1 trillion in 2012, Ps. 4.8 trillion in 2013 and Ps. 4.6 trillion in 2014, ending the year with a total loan portfolio of Ps. 10.6 trillion, as compared to a total portfolio of Ps. 9.5 trillion on December 31, 2013, Ps. 8.0 trillion on December 31, 2012, Ps. 7.1 trillion on December 31, 2011 and Ps. 5.9 trillion on December 31, 2010.
Fondo para el Financiamiento del Sector Agropecuario (“Finagro”), acting in its capacity as a rediscount bank, extended Ps. 4,182.0 billion of loans to rural producers during 2010, an increase of 6.6% compared to 2009. In 2011, the loans totaled Ps. 5,473.0 billion, an increase of 30.9% compared to 2010. In 2012, the loans totaled Ps. 6,472.1 billion, an increase of 18.3% compared to 2011. In 2013, the loans totaled Ps. 6,961.2 billion, an increase of 7.6% compared to 2012. In 2014, the loans totaled Ps. 8,113.1 billion, an increase of 16.5% compared to 2013.
Manufacturing
Manufacturing sector production increased by 0.25% in 2014 and accounted for 11.1% of 2014 GDP. Eight categories within the manufacturing sector showed decreases in 2014, while 17 sectors showed positive real growth. The largest decreases within the manufacturing sector were registered by wood, cork and straw products (which showed a 20.0% decrease); processed tobacco (which showed a 14.0% decrease); refined petroleum products (which showed a 8.7% decrease) and publishing, printing and analogous articles (which showed a 6.3% decrease). The categories that experienced the largest increases were coffee products and threshing (which showed a 12.8% increase); transport equipment (which showed a 6.8% increase); and sugar (which showed a 5.8% increase).
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The following table summarizes the composition of the manufacturing sector output and sets forth the rates of real growth for each sector for the periods indicated.
Composition and Real Growth of the Manufacturing Sector(1)
| % of Manufacturing GDP | Real Growth | |||||||||||||||||||||||||||||||||||||||
| 2010 | 2011 | 2012 | 2013(2) | 2014(2) | 2010 | 2011 | 2012 | 2013(2) | 2014(2) | |||||||||||||||||||||||||||||||
| Beef and Fish |
2.3 | % | 2.3 | % | 2.3 | % | 2.3 | % | 2.4 | % | 0.3 | % | 3.6 | % | 4.1 | % | (0.8 | )% | 2.3 | % | ||||||||||||||||||||
| Oils, Fats, Cocoa and other Food Products |
4.4 | % | 4.3 | % | 4.4 | % | 4.5 | % | 4.6 | % | (0.4 | )% | 2.8 | % | 0.9 | % | 3.3 | % | 3.2 | % | ||||||||||||||||||||
| Dairy Products |
1.8 | % | 1.7 | % | 1.8 | % | 1.8 | % | 1.9 | (0.6 | )% | 3.8 | % | 1.2 | % | 3.3 | % | 4.0 | % | |||||||||||||||||||||
| Milling Products, Starch and its Products |
5.8 | % | 5.7 | % | 5.6 | % | 5.5 | % | 5.7 | % | 2.4 | % | 3.1 | % | (1.6 | )% | (2.3 | )% | 4.1 | % | ||||||||||||||||||||
| Coffee Products and Threshing |
0.8 | % | 0.7 | % | 0.6 | % | 0.8 | % | 0.9 | % | 3.5 | % | (6.7 | )% | (7.8 | )% | 29.1 | 12.8 | % | |||||||||||||||||||||
| Sugar |
1.2 | % | 1.3 | % | 1.3 | % | 1.3 | % | 1.4 | % | (12.3 | )% | 10.7 | % | (1.4 | )% | 4.8 | % | 5.8 | % | ||||||||||||||||||||
| Beverages |
6.2 | % | 6.0 | % | 6.2 | % | 6.4 | % | 6.6 | % | (3.9 | )% | 2.0 | % | 3.5 | % | 2.8 | % | 4.5 | % | ||||||||||||||||||||
| Processed Tobacco |
0.3 | % | 0.3 | % | 0.2 | % | 0.3 | % | 0.2 | % | (10.0 | )% | (14.0 | )% | (11.6 | )% | 10.0 | % | (14.0 | )% | ||||||||||||||||||||
| Yarns, Threads and Fabric Fibers |
1.4 | % | 1.4 | % | 1.3 | % | 1.2 | % | 1.1 | % | (3.1 | )% | 3.9 | % | (6.3 | )% | (8.8 | )% | (3.2 | )% | ||||||||||||||||||||
| Textile Articles, except Apparel |
1.0 | % | 1.0 | % | 1.0 | % | 1.1 | % | 1.1 | % | 4.8 | % | 3.6 | % | 3.2 | % | 3.9 | % | 2.9 | % | ||||||||||||||||||||
| Knitted and Crocheted Fabrics; Clothing |
7.0 | % | 7.2 | % | 7.3 | % | 7.1 | % | 6.9 | % | 4.0 | % | 8.7 | % | 0.7 | % | (2.1 | )% | (-1.6 | )% | ||||||||||||||||||||
| Leather and Leather Products, Footwear |
2.0 | % | 2.2 | % | 2.1 | % | 2.0 | % | 2.1 | % | 5.2 | % | 11.4 | % | (3.3 | )% | (3.9 | )% | 5.5 | % | ||||||||||||||||||||
| Wood, Cork and Straw Products |
1.3 | % | 1.2 | % | 1.1 | % | 1.2 | % | 0.9 | % | (0.3 | )% | (2.4 | )% | (1.8 | )% | 1.7 | % | (20.1 | )% | ||||||||||||||||||||
| Paper and Pasteboard |
3.9 | % | 3.9 | % | 4.0 | % | 4.0 | % | 4.0 | % | 6.8 | % | 4.0 | % | 3.8 | % | (0.4 | )% | 1.0 | % | ||||||||||||||||||||
| Publishing, Printing and Analogous Articles |
3.9 | % | 3.8 | % | 3.9 | % | 3.8 | % | 3.5 | % | (4.4 | )% | 3.2 | % | 2.8 | % | (2.9 | )% | (6.3 | )% | ||||||||||||||||||||
| Processed Petroleum Products |
13.6 | % | 13.1 | % | 12.6 | % | 13.0 | % | 11.8 | % | 3.5 | % | 1.4 | % | (4.0 | )% | 3.6 | % | (8.7 | )% | ||||||||||||||||||||
| Chemical Products |
12.6 | % | 12.6 | % | 12.7 | % | 12.5 | % | 12.9 | % | 1.5 | % | 4.4 | % | 1.2 | % | (0.9 | )% | 3.3 | % | ||||||||||||||||||||
| Rubber and Plastic Products |
4.3 | % | 4.3 | % | 4.3 | % | 4.2 | % | 4.1 | % | 2.8 | % | 6.7 | % | (0.9 | )% | (1.8 | )% | (0.9 | )% | ||||||||||||||||||||
| Non-Metallic Mineral Products |
8.0 | % | 8.5 | % | 8.7 | % | 8.8 | % | 9.1 | % | (1.3 | )% | 11.3 | % | 2.7 | % | 1.7 | % | 3.3 | % | ||||||||||||||||||||
| Basic Metal Products (except Machinery and Equipment) |
6.9 | % | 6.9 | % | 7.1 | % | 6.8 | % | 6.9 | % | 3.4 | % | 5.6 | % | 3.0 | % | (3.7 | )% | 0.7 | % | ||||||||||||||||||||
| Machinery and Equipment |
2.8 | % | 2.8 | % | 2.8 | % | 2.8 | % | 2.9 | % | 6.4 | % | 4.7 | % | 0.1 | % | 2.3 | % | 1.9 | % | ||||||||||||||||||||
| Other Machinery and Electric Equipment |
2.4 | % | 2.5 | % | 2.4 | % | 2.6 | % | 2.7 | % | 11.0 | % | 9.7 | % | (5.3 | )% | 10.0 | % | 4.2 | % | ||||||||||||||||||||
| Transportation Equipment |
2.1 | % | 2.4 | % | 2.5 | % | 2.3 | % | 2.4 | % | 28.6 | % | 21.1 | % | 6.3 | % | (9.7 | )% | 6.8 | % | ||||||||||||||||||||
| Furniture and Related Products |
2.2 | % | 2.2 | % | 2.3 | % | 2.3 | % | 2.3 | % | 3.3 | % | 8.2 | % | 2.2 | % | 0.3 | % | (0.4 | )% | ||||||||||||||||||||
| Other Manufactured Goods |
2.2 | % | 2.1 | % | 2.1 | % | 2.1 | % | 2.1 | % | 5.2 | % | (0.8 | )% | 2.6 | % | (1.8 | )% | 2.9 | % | ||||||||||||||||||||
| Total |
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 1.8 | % | 4.7 | % | 0.1 | % | 0.6 | % | 0.2 | % | ||||||||||||||||||||
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Totals may differ due to rounding.
| 1: | Calculated using constant 2005 pesos. |
| 2: | Preliminary figures. |
| Source: | DANE. |
Mining and Petroleum
Colombia holds substantial reserves of petroleum, natural gas, coal, minerals, precious metals and precious and semi-precious stones, including nickel, gold, silver, platinum and emeralds. It is among the world’s leading exporters of emeralds, gold and coal. According to statistics compiled by DANE, the mining sector as a whole (including the petroleum industry) accounted for approximately 7.3% of GDP in 2014, as compared to 7.7% in 2013. Mining sector production decreased in 2014, recording real growth of -0.2%, as compared to 5.5% in 2013, mainly due to the decrease in the value of minerals and metals (8.4%) and in crude oil and natural gas (1.4%).
The Republic owns all oil and gas reserves within the territory of Colombia. Until 1974, the Government entered into concession contracts which allowed private companies to exploit oil or gas fields for limited periods of time (usually 20 years). From 1974 to 2003, Ecopetrol S.A., the Government-owned oil company, exploited these reserves either directly or in association with private companies.
In June 2003, the Government divided Ecopetrol S.A. into three state-owned entities. Ecopetrol S.A., the operating unit, continues to manage the operations of Colombia’s existing oil fields. Agencia Nacional de Hidrocarburos (“ANH”), the administrative unit, took charge, as of January 1, 2004, of the management of Colombia’s petroleum resources by assigning areas for exploration and production, evaluating the potential of the country’s petroleum reserves, promoting Colombia’s petroleum resources to attract investment and collecting royalties. According to Law 1760 of 2003, which created ANH, Ecopetrol S.A. could enter into new joint venture contracts through December 2003, but thereafter, ANH has been responsible for entering into all new oil and gas exploration and production contracts. Promotora de Energía de Colombia, the
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investment unit, manages some of Ecopetrol S.A.’s non-strategic investments. Ecopetrol S.A. is now a mixed economy company and is no longer 100% owned by the Ministry of Mines and Energy. Prior to the public offering of its shares described below, the Ministry of Finance owned 95% of Ecopetrol S.A.’s shares and the remaining shares were owned by other public sector enterprises. On July 25, 2007, the Government announced a public offering of 20% of the shares of Ecopetrol S.A. The newly issued shares, representing 10.1% of total shares, were offered from August 27, 2007 through September 25, 2007, to active employees, pension funds, cooperatives, mutual funds and Colombian citizens. On September 25, 2007, Ecopetrol S.A. received Ps. 5.7 trillion for all the offered shares. The proceeds from the sale were used to invest in exploration, exploitation of hydrocarbons, and modernization and development of biofuels. As of December 31, 2014, the Government owned 88.5% of Ecopetrol S.A.’s shares.
In October 2012, Ecopetrol S.A. transferred its direct interests in Ocensa, ODC, Oleoducto Bicentenario, ODL and Serviport to Cenit Transporte y Logística de Hidrocarburos S.A.S. (“Cenit”). On April 1, 2013, Ecopetrol S.A. transferred its hydrocarbon transport and logistics assets (crude oil and multiproduct pipelines and loading and unloading facilities) to Cenit, and Cenit started its operations as owner of the transportation and logistics infrastructure. On January 1, 2014 Ecopetrol S.A. transferred its port concessions and assets to Cenit.
On April 1, 2013, Ecopetrol S.A. entered into a number of contracts with Cenit in order to establish their operating relationship. Pursuant to transportation and service agreements, Cenit provides to Ecopetrol S.A., for a term of 30 years, with hydrocarbon and refined products transportation, storage, loading and unloading and logistics services through the transportation assets that were transferred to it as an in-kind capitalization. Ecopetrol S.A. also entered into an operation and maintenance agreement with Cenit pursuant to which Ecopetrol S.A. is in charge of the operation and maintenance of the transportation assets for a term of 15 years. In return, Cenit will pay Ecopetrol S.A. a variable monthly payment for the services rendered. The companies also entered into a project management agreement, pursuant to which Ecopetrol S.A. provides project management services on market terms to Cenit for a term of 15 years.
In December 2014, Ecopetrol S.A. received authorization from the Superintendency of Ports to merge its wholly owned subsidiary EPI into Cenit. The merger was completed on December 19, 2014, adding Ps. 1 billion in assets to Cenit. As a result of the merger, Cenit is now a direct wholly owned subsidiary of Ecopetrol S.A.
Under Colombia’s royalty system, the national, departmental and municipal governments share a royalty on all crude oil and natural gas production. For most of Ecopetrol S.A.’s oil field exploration and exploitation contracts, the royalty is equal to 20% of the total value of the oil production from the field. Concession contracts, however, individually provide a royalty percentage which is unique to each contract. In 1999, a modification to the royalty system established a sliding royalty percentage linked to the level of production for oil fields discovered after July 29, 1999. Under the various contract arrangements discussed below between Ecopetrol S.A. and private companies, it is customary for Ecopetrol S.A. to calculate its own share of production after payment of the royalty. Law 756 of 2002 further modified the oil royalties system and is geared towards encouraging oil exploration in small- and medium-size fields. This law establishes variable royalties ranging from 8% for fields producing up to 5,000 barrels per day to 25% for fields producing in excess of 600,000 barrels per day.
To address the country’s exploration and production needs, Colombia has modified the contractual regime governing the exploration, development and production of hydrocarbons on a number of occasions since its introduction in 1970. The exploration and production contracts entered into with Ecopetrol S.A.’s business partners set forth the production split, the length of the exploration and production terms, and royalty payments.
Under Colombian law, an existing contract cannot be modified because of a change to the contractual regime unless the change is made through public order regulations. As a result, contracts that were executed prior to the issuance of a new contractual regime remain in full force and are not affected by the subsequent regime. As of December 31, 2014, Ecopetrol S.A. and certain of its subsidiaries carry out exploration and production operations through 133 exploration and production agreements and technical evaluation contracts signed with the ANH, as well as through association contracts and other types of contracts in various forms.
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Under joint venture contracts entered into before March 1994, which include contracts regarding the Cusiana and Cupiagua crude oil fields, among others, the private investor explored a previously agreed upon area at its own risk and expense. Thereafter, Ecopetrol S.A. had the option to become a joint venture partner by reimbursing the investor 50% of the exploration costs of oil wells within commercially viable fields and 50% interest of all future development costs related to those fields. Once Ecopetrol S.A. became a partner, it had a 50% interest in the production of the field.
If Ecopetrol S.A. decided not to become a joint venture partner within a certain period of time, the private investor had the right to enter into a sole risk contract for the field’s crude oil production until it had recovered 200% of its investment and 100% of all its total costs. Thereafter, Ecopetrol S.A. could participate in the development of the field and all future costs and expenses would be automatically shared with the partner.
Beginning in 1994, modifications were made to standard joint venture contracts to maintain the private investor’s share of production at 50% until aggregate production exceeded 60 million barrels. Thereafter, Ecopetrol S.A.’s share increased gradually, up to a maximum of 70% of production. In 1995, further modifications to the standard joint venture contracts required Ecopetrol S.A. to pay for half of the exploration costs, not only for wells that ultimately proved to be productive, but also for dry wells, stratigraphic wells and seismic exploration in fields that became commercially viable. The modifications also provided for competitive bidding for the right to explore and develop marginal fields (defined according to certain technical, financial and operational criteria). In the bidding process, private companies presented bids based on percentages of production they would pay Ecopetrol S.A. in exchange for the rights to develop these fields. Winning bidders were responsible for all future investment and operating costs related to the field.
The standard joint venture contract was once again modified in 1997 in order to promote private sector activity in the development of inactive areas and small fields and in the exploration for natural gas. These modifications extended the exploration periods, increased the levels of reimbursement for private companies’ exploration costs and provided for the reimbursement of exploration costs in real terms and denominated in U.S. dollars.
In 1999, the Government adopted two additional modifications to the standard terms, applicable to new joint venture contracts:
| • | Reduction of Ecopetrol S.A.’s Initial Participation. Ecopetrol S.A.’s initial participation under the joint venture contracts signed after this reform was reduced from 50% to 30%. |
| • | Modified R Factor. The Government modified the formula used to determine the increase in Ecopetrol S.A.’s share of total production, the R Factor. The R Factor is calculated by dividing accumulated revenues in cash by investments and costs. If the R Factor increases above a certain profitability threshold, then Ecopetrol S.A.’s share of production increases above the initial 30%. Pursuant to the 1999 modifications, Ecopetrol S.A. raised the profitability threshold at which the R Factor triggers an increase in Ecopetrol S.A.’s share from 1.0 to 1.5. Additionally, prior to the 1999 modifications, the R Factor was calculated in constant U.S. dollars. The new calculation method was designed to prevent inflation from causing an increase in the R Factor and a corresponding increase in Ecopetrol S.A’s share. As of December 31, 2014, Ecopetrol S.A. had 46 joint venture contracts with a modified R Factor. |
Ecopetrol S.A. has entered into various joint venture and other contractual agreements for the exploration and production with regional and international oil companies. These arrangements include: risk participation contracts, incremental production agreements, shared risk production contracts, risk services production contracts and discovered undeveloped fields contracts.
Risk-participation contracts. Under these contracts, Ecopetrol S.A. assumes 20% of the exploration costs and risks at the beginning of the second year in exchange for a larger participation in the future production and equal representation on the executive committee of the joint venture. As of December 31, 2014, Ecopetrol S.A. had three risk participation contracts in effect.
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Incremental Production Agreements. Ecopetrol S.A. currently has two types of incremental production agreements: the standard incremental production agreements (“SIPA”) and the development of incremental production project agreements (“DIPA”).
| • | SIPAs. Under the SIPAs, Ecopetrol S.A. calculates the total number of proved developed reserves available in a specific field or well and then establishes a base production curve for the reserves. Any future production exceeding the curve, which is referred to as incremental production, results from extracting proved undeveloped reserves or probable reserves which require additional investments funded by Ecopetrol S.A.’s partners under the SIPA. Ecopetrol S.A. has the right to a previously specified percentage of the incremental production. Ecopetrol S.A’s. percentage participation varies depending on the total amount invested by Ecopetrol S.A.’s partners and on the R Factor, which cannot be lower than 1.5. The volume produced under the production curve is not shared with the partners. As of December 31, 2014, Ecopetrol S.A. had five SIPAs in effect. |
| • | DIPAs. Under DIPAs, Ecopetrol S.A. must file a request with the Ministry of Mines and Energy to approve an incremental production project for a field that Ecopetrol S.A. directly operates. If the project is approved, Ecopetrol S.A. agrees with its partners to develop the field and Ecopetrol S.A. determines mandatory investment thresholds for the partners. Ecopetrol S.A. is not required to fund any investment. The production from the field is distributed to Ecopetrol S.A. and the partners receive a percentage of the total production from the field that varies depending on the invested amount. Once the mandatory investment stage expires, Ecopetrol S.A. agrees with its partners on the percentage of production, total costs and additional investments to be paid by each party. Ecopetrol S.A. pays 20% royalties to the Government on the base production curve and variable royalties on any incremental production. Additionally, in the event of higher prices and large volumes, Ecopetrol S.A. has adjustment clauses to increase its share in the production. As of December 31, 2014, Ecopetrol S.A. had one DIPA in effect. |
Shared-Risk Production Contracts. Under these contracts, Ecopetrol S.A. remains as operator of the field and assumes responsibility for 50% of all investments and costs. Private companies submit bids to enter into agreements with Ecopetrol S.A. based upon the production percentage they will assign to Ecopetrol S.A. The successful bidder has the right to enter into the shared risk contract with Ecopetrol S.A. As of December 31, 2014, Ecopetrol S.A. had one shared risk production contract outstanding.
Risk Service Production Contracts. Ecopetrol S.A. began using risk service production contracts in January 1998 to increase production through the use of new technologies in crude oil fields then operated by Ecopetrol S.A.’s partners. All investments in new technologies were made by its partners who received a previously specified fee per barrel. As of December 31, 2014, Ecopetrol S.A. had one risk service contract outstanding for the development of the Rancho Hermoso field located in the Mirador formation.
Discovered Undeveloped Fields Contracts. Ecopetrol S.A. has entered into discovered undeveloped fields contracts to promote exploration by private companies of both undeveloped and inactive fields. Under these contracts, the contracting party assumes all costs and expenses for the development and operation of a field in exchange for a certain amount of production. As of December 31, 2014, Ecopetrol S.A. had six discovered undeveloped fields contracts.
As a result of technological improvements undertaken by Ecopetrol S.A., the company generated $482 million in economic benefits in 2014, as certified by the operating businesses. These economic benefits are the result of cost savings in the transport of 3,770 barrels per day of diluent, the incremental production of 2,900 barrels of oil per day, the possibility of recovery of 72 barrels per day of condensates, increased loads and improved quality of the gas for sale. Additionally, the Departamento Administrativo de Ciencia,
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Tecnología e Innovación (“Colciencias”) certified 27 science and technology projects focused on developments and innovations for the hydrocarbon industry which are valued at $110 million. As of December 31, 2014 Ecopetrol S.A. signed 81 technology cooperation agreements, in which it invested US$ 10.7 billion. This includes nine agreements entered with national universities and three with the private sector, as well as three technology cooperation agreements with international universities.
In addition, Ecopetrol S.A. continued implementing nine co-financing contracts entered into with Colciencias in 2013, including one for the development of robotic technology focused on oil exploration on the Colombian seabed, and another to increase the recovery factor in heavy oil fields.
Current Joint Venture Contractual Regime
In 2004, the authority to enter into exploration and production contracts was assigned to ANH under a different exploration and production contractual arrangement. Ecopetrol S.A. became an operator like any other company, competing with all other regional and international oil companies in Colombia for exploration and production opportunities under the same conditions and without any special rights. Decree Law 1760 of 2003 gave Ecopetrol S.A. the right to maintain in effect all contracts that the company had entered into prior to January 1, 2004, as well as to have absolute discretion as to whether or not such contracts would be extended after their stated termination date. If Ecopetrol S.A. decided not to extend the contracts, the production rights and assets related to the relevant block would revert to Ecopetrol S.A. and Ecopetrol S.A. would have the right, at no additional cost, to exploit the associated reserves indefinitely. Contracts entered into by Ecopetrol S.A. after January 1, 2004 that are not extended by ANH would revert to ANH and not to Ecopetrol S.A.
In 2004, ANH introduced two new model contracts to replace the previously used joint venture contracts: the exploration and production contract and the technical evaluation agreement.
Exploration and Production Contracts. Under exploration and production contracts, the contractor, including Ecopetrol S.A., undertakes all exploration and production activities. The contractor also assumes all risks and costs of exploration and is the sole owner of all production and assets involved in the exploration and production activities for the term of the contract. There is no partnership or joint venture between the contractor and ANH.
Technical Evaluation Agreements. The scope of the technical evaluation agreements is limited to exploration activities. Under this type of agreement, the contractor can evaluate a specific area and decide whether or not it will enter into an exploration and production contract. The contractor assumes all risks and costs of the activities and operations.
Ecopetrol S.A. entered into several agreements or “Convenios” with ANH in areas directly operated by Ecopetrol S.A., where Ecopetrol S.A. holds total exploration and production rights up to the point when revenue from the well falls below the costs of operations set by the company (the “economic limit”).
When joint venture contracts agreed before December 31, 2003 expire, Ecopetrol S.A. is required to enter into agreements with ANH pursuant to Article 2 of Decree 2288 of 2004. The purpose of these agreements is to define the terms and conditions under which Ecopetrol S.A. can exercise its exclusive right of exploration and production of hydrocarbons—granted by Decree Law 1760 of 2003—in the agreement area until the economic limit of the area covered by the contract has been reached.
Ecopetrol S.A. has entered into a number of exploration and production contracts with regional and international oil companies.
In 2013, Ecopetrol S.A. issued bonds in the international capital markets in an aggregate principal amount of $2.5 billion. On May 28, 2014, Ecopetrol S.A. issued bonds in the international capital markets in an aggregate principal amount of $2 billion. On September 9, 2014, Ecopetrol S.A. issued bonds in the international capital markets in an aggregate principal amount of $1.2 billion. Ecopetrol S.A. stated that the proceeds of the 2013 and 2014 issuances would be used for general corporate purposes, including capital
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expenditures. On June 23, 2015, Ecopetrol S.A. issued bonds in the international capital markets in an aggregate principal amount of $1.5 billion. According to Ecopetrol S.A., the proceeds from the offering will be used for general corporate purposes, including its investment plan.
As of December 31, 2014, Colombia’s proven crude oil reserves totaled approximately 2,308 million barrels and Colombia’s proven gas reserves totaled an estimated 4.7 trillion cubic feet. The following table sets forth Colombia’s proven crude oil and natural gas reserves at the dates indicated.
Proven Reserves of Colombia(1)
| As of December 31, | ||||||||||||||||||||
| 2010 | 2011 | 2012 | 2013 | 2014 | ||||||||||||||||
| Crude Oil (millions of barrels) |
2,058 | 2,259 | 2,377 | 2,455 | 2,308 | |||||||||||||||
| Natural Gas (trillions of cubic feet)(2) |
5.4 | 5.5 | 5.7 | 5.5 | 4.7 | |||||||||||||||
| 1: | “Proven reserves” are defined as the estimated quantities of crude oil and natural gas which geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs. In the case of reserves to which Ecopetrol S.A. has the sole right of development, Ecopetrol S.A. estimates proven reserves in accordance with the methodology promulgated by the Society of Petroleum Engineers. While this methodology permits such estimates to be based on assumptions regarding future economic and operating conditions (including prices and costs), Ecopetrol S.A. includes as proven reserves only those reserves that, at the date of estimation, are recoverable under existing economic and operating conditions. Ecopetrol S.A. estimates its share of reserves that are to be developed pursuant to joint venture contracts using the same methodology as employed in the calculation of direct reserves, based on seismic, geological and other technical data supplied by the respective operators and reviewed by Ecopetrol S.A.’s petroleum engineers. |
| 2: | Corresponds to gas with concrete commercial viability. |
| Source: | ANH |
Until 2000, Colombia had witnessed relatively little exploration activity. This was the result of both the significant decline in oil prices in 1997 and 1998 and fiscal policies and contractual terms that were not internationally competitive. Since 2002, however, exploration activity has generally increased as a result of higher investments in operations by Ecopetrol S.A., as well as reforms to the standard terms of exploration and production contracts (as discussed above) that have attracted investors, but experienced a decrease in 2011 and 2012. Total seismic exploration was 25,965 kilometers in 2010. In 2011, total seismic exploration decreased to 23,963 kilometers and in 2012 further decreased to 18,205 kilometers. In 2013 total seismic exploration increased to 28,529 kilometers. In 2014 total seismic exploration increased to 40,453 kilometers. The drilling of exploration oil wells generally increased from 2009 to 2012, but decreased slightly in 2013 and 2014. A total of 112 oil wells were drilled in 2010. In 2011 and 2012, the number of oil wells drilled increased to 126 and 131, respectively. In 2013, the number of oil wells drilled decreased to 115. In 2014, the number of oil wells drilled decreased to 113.
Production of crude oil in Colombia decreased from an average of 1,008 thousand barrels per day in 2013 to 990.5 thousand barrels per day in 2014, due to environmental, public order (operational delays arising from strikes and demonstrations by indigenous communities) and operational issues. Ecopetrol S.A.’s direct production accounted for approximately 58.5% of the total crude oil production in 2014 as compared to 60.8% in 2013.
Of the 990.5 thousand barrels of crude oil produced per day in 2014, approximately 77.8% were exported, as compared to 74.7% of total crude oil production in 2013. Ecopetrol S.A. was responsible for exporting 46.7% of the total crude oil produced by Colombia in 2014, as compared to 45.3% in 2013. The value of Colombia’s exports of crude oil and its derivatives in 2014, according to balance of payments statistics, totaled an estimated $28.9 billion, a 9.8% decrease from the 2013 level. This decrease was due to a decrease in volume and price. The average export price of crude oil in 2014 for Ecopetrol S.A. was $87.1 per barrel as compared to $99.95 per barrel in 2013. Ecopetrol S.A.’s average daily volume of exports of crude oil in 2014 was estimated at 537.3 thousand barrels per day, a 0.5% decrease over the average daily volume in 2013 of 540 thousand barrels per day. Since 1995, the Government has used a stabilization fund through which revenues from the Cusiana production are invested abroad in order to avoid the inflationary effects associated with large inflows of oil revenues into the country. For further details on the stabilization fund, see “Public Sector Finance—General” below.
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In connection with its core activities of exploration and production of oil and gas, Ecopetrol S.A. has developed a network of pipelines used to transport crude oil, natural gas and oil products to domestic refineries, major distribution points and export facilities. The pipelines, some of which are wholly-owned by Ecopetrol S.A. while others are owned jointly with joint venture partners or other companies, transport oil and gas owned by Ecopetrol S.A., joint venture partners and concession operators. The 829 km OCENSA pipeline, a joint venture among Ecopetrol S.A., joint venture partners and other companies, was completed in February 1998. The pipeline transports crude oil from the Cusiana and Cupiagua and other nearby fields to the port of Coveñas. The pipeline maintained an average output of approximately 598 thousand barrels per day during 2014, 73% of which corresponds to Ecopetrol S.A. A subsidiary of Ecopetrol S.A., Oleoducto Bicentenario, is in the second phase of construction of the Araguaney-Coveñas pipeline, which is expected to be the longest of its kind in Colombia. The first phase of the construction permits the transportation of at least 110 thousand barrels per day, with a pipeline of 230 kilometers in length and a diameter of 42 inches, connecting Araguaney to Banadía. The first phase of the contract was completed in March 2014.
The Government, with private sector participation, intends to substantially expand the natural gas pipeline network and the related infrastructure over the next several years. The production of natural gas is driven by the growth of local demand and exports to Venezuela. In 2014, the average daily production of natural gas by Ecopetrol S.A. reached 125.4 thousand barrels of oil equivalent per day (“boepd”), a 2.7% reduction when compared with 2013. Colombia has three main natural gas production fields, Guajira, Cusiana and Cupiagua. The majority of Colombia’s natural gas is produced by joint ventures. In the Guajira field, Ecopetrol S.A. has partnered with Chevron. In the development of the Cusiana field, Ecopterol S.A.’s partners are Equión and Sinochem Petroleum Exploration and Production. Ecopetrol S.A. directly operates the Cupiagua field, including the Cupiagua gas plant, which is connected with the Cusiana field through the Cupiagua-Cusiana gas pipeline. Of Colombia’s total natural gas production as of December 31, 2014, 40% was supplied from the Guajira field, 21% from the Cusiana field, 18% from the Cupiagua field and the remaining 21% from fields located in other regions.
In 2014, Ecopetrol S.A.’s daily gas production decreased by 2.8% from 129 thousand boepd in 2013 to 125 thousand boepd in 2014, primarily due to the limitations on water disposal, mainly in Campo Rubiales, the natural decline of fields, especially in Guajira, and the operational difficulties associated with strikes which generated delays in the building of new facilities and wells. In 2009, Ecopetrol S.A. continued its investments directed at increasing gas supply by investing in gas treatment plants and the Cusiana Liquefied Petroleum Gas (LPG) plant. In November 2005, Colombia and Venezuela entered into an agreement to build a two-way gas pipeline between the two countries. Under the agreement, the pipeline was to send 450 million cubic feet of natural gas per day from Colombia’s La Guajira region to Venezuela’s Paraguana peninsula during the first four years of service. At the end of that period, the pipeline’s flow was to be reversed with Venezuela supplying 150 million cubic feet of gas per day to Colombia from 2012 to 2028. The construction of the pipeline began on July 8, 2006 at a projected cost of $335 million and was inaugurated on October 12, 2007. In December 2011, Ecopetrol S.A. extended the natural gas export agreement between Colombia and Venezuela for two years beginning in January 2012. In 2012, export sales of natural gas by Ecopetrol S.A. increased by 9.3% as compared with 2011, principally due to a 17.7% increase in average export prices in U.S. dollar terms. In 2013, export sales of natural gas by Ecopetrol S.A. increased by 2.3% as compared with 2012, despite a 2.8% decrease in average export prices in U.S. dollars. In 2014, the export of natural gas decreased by 52% compared to 2013 due in part to Resolution 90456 of 2014 of the Ministry of Mines and Energy, which gives priority to domestic consumption of natural gas by thermal plants, thus restricting exports.
Construction
The construction sector contracted by 0.1% in 2010 but grew by 8.2% in 2011, 6.0% in 2012 and 11.6% 2013. In 2014, the construction sector grew by 9.9%. This positive growth in 2014 was due to an increase in construction of buildings and civil works.
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Services
The services sector accounted for 54.3% of GDP in 2014. Activity in the services sector increased by 4.9% in real terms in 2014, following increases of 4.3%, 5.7%, 4.5% and 4.8% in 2010, 2011, 2012 and 2013, respectively. The following table shows the composition of the services sector for the years indicated.
Composition of Services Sector
| 2010 | 2011 | 2012 | 2013(1) | 2014(1) | ||||||||||||||||
| (Percentage of total services) | ||||||||||||||||||||
| Transportation, Storage and Communications |
13.6 | % | 13.7 | % | 13.6 | % | 13.5 | % | 13.4 | % | ||||||||||
| Retail, Restaurants and Hotels |
22.1 | % | 22.3 | % | 22.1 | % | 22.1 | % | 22.0 | % | ||||||||||
| Financial Services |
8.6 | % | 9.2 | % | 9.6 | % | 9.8 | % | 10.1 | % | ||||||||||
| Housing |
15.5 | % | 15.1 | % | 14.9 | % | 14.6 | % | 14.4 | % | ||||||||||
| Services to Companies except Financial Services and Housing |
11.7 | % | 11.8 | % | 11.9 | % | 11.9 | % | 11.9 | % | ||||||||||
| Public Administration and Defense |
15.9 | % | 15.4 | % | 15.4 | % | 15.7 | % | 15.9 | % | ||||||||||
| Education |
3.3 | % | 3.2 | % | 3.2 | % | 3.2 | % | 3.2 | % | ||||||||||
| Social and Health |
3.9 | % | 3.8 | % | 3.9 | % | 3.9 | % | 4.0 | % | ||||||||||
| Recreation, Cultural, Sports and Other Services |
4.0 | % | 4.1 | % | 4.0 | % | 4.1 | % | 4.1 | % | ||||||||||
| Domestic Services |
1.4 | % | 1.3 | % | 1.3 | % | 1.3 | % | 1.3 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total |
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Totals may differ due to rounding.
| 1: | Preliminary figures. |
| Source: | DANE. |
The retail, restaurants and hotels subsector increased by 4.6% in real terms in 2014, as compared to 4.5% increase in 2013, and accounted for 12.0% of GDP in 2014. The financial services subsector grew by 8.1% in real terms in 2014, as compared to 7.3% real growth in 2013, and accounted for 5.5% of GDP in 2014. Transportation, storage and communications increased by 4.2% in real terms in 2014, as compared to 3.6% real growth in 2013, and accounted for 7.3% of GDP in 2014.
As of December 2014, there were approximately 204,855 km of roads in Colombia. The public roads within Colombia are categorized as primary, secondary, tertiary or other roads. The primary network consisted of 17,434 km of nationwide roads and expressways, which facilitates access to the capitals of the departments. The secondary network consisted of 45,137 km of regional roads which connect smaller cities. The tertiary network consisted of 142,284 km of roads which connect towns and other localities.
Over the last several years, the road concessions program has substantially increased the participation of private companies in the transportation sector. These concessions permit the construction of safer and more modern roadways. The transportation corridors to be constructed under these concessions will connect large industrial and agricultural centers, which are primarily located in the nation’s interior, with the most important Atlantic and Pacific ports. These corridors include the Bogotá–Santa Marta (“Ruta del Sol” concession) corridor, the Bogotá–Buenaventura corridor and the Caribbean road network. As of December 2014, the road concessions consisted of 6,239 km of roads (as part of the 17,434 km of the primary network).
With respect to the communications sector, Colombia had 15.5 telephone lines in service per 100 inhabitants on December 31, 2010, 15.5 telephone lines in service per 100 inhabitants on December 31, 2011, 13.5 telephone lines in service per 100 inhabitants on December 31, 2012, 15.2 telephone lines in service per 100 inhabitants on December 31, 2013 and 15.1 telephone lines in service per 100 inhabitants on December 31, 2014. Prior to 1998, Empresa Nacional de Telecomunicaciones, a state-owned company, was the primary provider of domestic and international long distance telephone services in Colombia. Since August 1997,
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however, ten-year licenses with automatic ten-year extensions have been granted to new operators of domestic and international long distance telephone services. In December 1998, Empresa de Teléfonos de Bogotá (“ETB”, owned by the capital district of Bogotá) and Orbitel (a privately owned company), began providing international and domestic long-distance services, ending the 50-year monopoly of Empresa Nacional de Telecomunicaciones.
In recent years, Colombia has witnessed increased demand for cellular telephone service. In 2003, Colombia had an estimated 14.3 mobile telephone lines in operation per 100 inhabitants, with service provided by Telefonica Móvil, Comcel and the recently formed Colombia Movil. According to the Ministry of Communications, there were approximately 41.2 million mobile telephones in use at year-end 2009. At year-end 2010, there were 44.5 million mobile telephones in use in Colombia. As of the fourth quarter of 2014, there were 55.3 million mobile telephones in use in Colombia, a 3.7% increase from the same quarter in 2013. The Government has made cellular telephone service subject to private sector participation and competition.
In 2010, the Government aimed to quadruple the number of internet broadband connections from 2.2 million to 8.8 million by 2014 through the “Plan Vive Digital”, a program designed to reduce unemployment and poverty while increasing competitiveness. At the end of 2014, the number of internet broadband connections exceeded the target, reaching a total of 9,891,506 broadband subscribers, in comparison with 8,216,401 broadband subscribers recorded at the end of 2013.
The Government operates three national public television networks. In the first half of 1998, in accordance with a law that permits greater private sector participation in television networks, two private television networks, RCN and Caracol, began operations nationwide. In addition, local governments support eight regional networks and there is one regional private network. On October 29, 2009, the National Commission on Television (“CNTV”) initiated a bidding process to license a third private television network for a ten year period. In January 2012, some of the functions of CNTV were transferred to the newly created National Television Authority (“ANTV”). The ANTV is responsible for providing for the implementation of programs for the public television service. In April 2013, the ANTV entered into an agreement with Universidad Nacional de Colombia the university to establish the financial, economic, technical and legal criteria by which ANTV will award a license to private television networks. Although ANTV has initiated the bidding process to license the third private television network, the bidding process has been suspended. Caracol TV and RCN TV, two private television networks, were sanctioned in 2012 and 2013 and were each required to pay the Government Ps.32,000 million for the period between July 2010 and December 2012, a sum that was paid at the time by the channels. However, the sanction imposed on these channels since 2013 has not been paid voluntarily and consequently ANTV cannot proceed with the bidding process until a final award is made in the arbitration proceedings with Caracol and RCN.
Energy
In 2014, 69.6% of electric energy consumption in Colombia was derived from hydroelectric generated sources, while 29.1% was derived from thermally generated (gas and coal) sources and the remaining 1.3% was derived from other sources. In 2014, the output of the utility sector (electricity, gas and water) increased by 3.8% in real terms and accounted for 3.5% of GDP.
Colombia’s proven energy reserves in 2014 included approximately 6,245 million tons of coal, 2,308 million barrels of crude oil and 4.7 trillion cubic feet of natural gas, including natural gas with concrete commercial viability and natural gas that can be used for oil extraction purposes. In addition, it is estimated that Colombia has the capacity to generate more than 15,672.85 megawatts of electric power.
By the end of 1997, all of the major cities in Colombia were connected to an extensive gas pipeline network. Ecopetrol S.A. sponsored two significant projects consisting of a total of 1,350 km of pipeline, under a “build, own, operate, maintain and transfer” (“BOMT”) arrangement with private companies. Construction contracts for an additional 1,695 km of pipeline were awarded. Law 401 of 1997 created the Empresa Colombiana de Gas (Colombian Natural Gas Corporation, or “ECOGAS”) to manage the gas transmission network. In February 2007, Transportadora de Gas Internacional S.A. ESP (“TGI”) acquired
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ECOGAS. TGI, a subsidiary of Empresa de Energía de Bogotá, operates and maintains the most extensive network of pipelines in Colombia, transporting natural gas in the “interior system” through a network that extends from La Guajira to Cauca Valley and from the Eastern Plains to Huila and Tolima and several departments across the Andean region.
Over the past decade, the Government has restructured the energy sector in order to improve the economic performance of the companies within the sector. For example, the Government has encouraged competition, private investment and the development of alternative energy sources. The 1994 Electricity Law significantly transformed the electric power sector. It permits the formation of privately-owned electric utility companies and the privatization of all or part of existing public sector companies. However, it prohibits vertical integration of new entrants into the utilities sector. In addition, a 1995 restructuring program resulted in an increase in private participation in power generation.
Following the Government’s sale in 1996 of several major power generation plants, private sector investors purchased 48.5% of the capital stock of Empresa de Energía de Bogotá and 56.0% of the capital stock of Empresa de Energía del Pacifico S.A. E.S.P. in 1997. As of December 2014, 35.4% of Colombia’s total power generation capacity was privately held, while 64.5% continued to be state-owned, of which 30.8% is purely state-owned generation and the other 33.8% is of mixed ownership. The Superintendencia de Servicios Publicos (Superintendency of Public Services) has intervened in the management of Cedelca and Electrolima. On July 26, 2002, the Government announced the liquidation of the Chocó power generation plant and the creation of a new company, Dispac, which is operated by private parties. On February 26, 2007, the Government authorized the sale of 19.2% of its stake in Isagen, one of the largest power generation companies in Colombia. See “— Role of the State in the Economy; Privatization — Isagen” below for the additional information on the Government’s announced sale of its remaining interest in Isagen. The Government sold a portion of its shares of Interconexión Eléctrica S.A. (“ISA”), one of Colombia’s largest electricity transmission companies, in two successful public offerings in 2001 and 2002. As of December 31, 2014, private participation in electricity transmission was 2.5%.
In addition to electricity generation and transmission, the Government has also made progress in privatizing electricity distribution. As of December 2014, 13.0% of Colombia’s total distribution capacity was privately held.
Infrastructure Development
Deficiencies in Colombia’s infrastructure have created economic inefficiencies that have adversely affected the country’s economic performance. To address this concern, the Government has been working to expand the telecommunications infrastructure, cargo ports, airports and roads.
The Government is implementing 28 large scale projects for the development of improvements for new and upgraded highways. These projects are being implemented in three phases. The first phase consists of ten highways that are projected to cover 1,628 km, representing an investment of Ps. 12 trillion. The second phase consists of nine highways that are projected to cover 1,800 km, representing an investment of Ps. 11.7 trillion. The third phase is still undergoing planning development. The objective of these projects is to modernize the country’s road infrastructure, making it more competitive and boosting economic development.
Of the 28 large scale projects, the ten in the first phase of development are subject to promulgated implementing laws providing for the initiation of work, and the nine in the second phase are in the process of being awarded for construction. Additionally, the nine in the third phase are in the process of being structured.
The Ministry of Information Technologies and Communications, through the Connectivity Directorate (formerly the Compartel program), has initiated a project with the goal of providing access points to the internet, called Vive Digital Kiosks, to the population in rural or remote areas with more than 100 people. The project aims to promote and increase the use of information and communication technology through better equipment, faster connection speeds and workshops designed for children, youths and adults of all ages to be better attuned to the digital world.
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The project consists of the following two phases:
| • | the first phase will ensure: (i) the provision of telecommunication services in community access points that were originally provided by the Compartel program, which ended its operations on March 30, 2013; (ii) that 70% of the targeted population centers have a community access point to the internet; and (iii) that community access points are installed in National Parks. |
| • | the second phase will seek to provide that all targeted population centers have an access point to the internet. |
To encourage private sector participation in the supply of communication services, the Government has encouraged a deregulation process that began in the early 1990’s. That process emphasized infrastructure modernization in specific areas that are key to attaining global competitiveness.
Under Law 1341 of July 30, 2009, the Ministry of Communications became the Ministry of Information Technologies and Communications. The law also provided a legal framework for the technological development of the sector and the promotion of access and the use of information technology and communication through substantial use, free competition and efficient use of infrastructure and user protection.
In addition to the expansion of the telecommunications infrastructure and the construction of new roadways and the repair of existing ones, the Government plans to continue promoting private investment participation to improve other infrastructure, such as cargo ports, airports and roads. The Government also is considering the implementation of long-term energy generation and transmission capacity expansion by encouraging strategic investors to explore and develop oil and natural gas offshore and onshore fields and to invest in the natural gas transportation and oil refining capacity expansions through privatizations, concessions and joint ventures. In addition, the Government plans to finance private investment activity from the domestic and international capital markets.
In 2006, Ecopetrol S.A. selected Glencore AG as its strategic partner in the development of a master plan with respect to the Cartagena refinery. In accordance with the master plan, Refinería de Cartagena S.A.-RCS (“Reficar”) was incorporated and began operations on April 1, 2007. Simultaneously with the incorporation of Reficar, Ecopetrol S.A. transferred all of the refinery’s assets to Reficar in exchange for a 49.0% interest. On August 19, 2008, the Government granted special treatment to the expansion of the Cartagena refinery project.
In February 2009, as a result of financing difficulties experienced by Glencore AG which were making it challenging to develop the master plan, Ecopetrol S.A. entered into a memorandum of understanding with Glencore AG pursuant to which it acquired in May 2009 an indirect interest in all of Glencore AG’s interest in Reficar. As part of this overhaul plan, Ecopetrol S.A. expects to increase the competitiveness and profitability of the refinery through the modernization of its facilities and processes and improve the reliability of its units. Ecopetrol S.A. planned to increase the refinery’s production capacity to 165 thousand barrels per day and improve refining margins by processing cheaper heavy crude oils, thus raising the conversion ratio and producing a higher quality product slate. The completion of the refinery, however, has been delayed. In 2013, the largest machines were successfully installed and 50 million hours were completed without fatal or environmental accidents. The installation of equipment and construction of the refinery has been completed. Since May 2014, the final industrial units have been delivered and recruitment of start-up workers, which will continue until the anticipated start of commercial operation in October 2015, has commenced. Ecopetrol S.A. also expects to satisfy existing environmental regulations for fuels by reducing sulfur content in gasoline and diesel fuel, thus complying with national and international fuel standards.
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Role of the State in the Economy; Privatization
General
The Government is active in mining and the exploitation of other natural resources, as well as in the telecommunications and electricity industries. The Government expects its role in the production of goods and services to diminish as it continues to encourage private sector investment and participation in sectors previously dominated by the public sector, and as it implements other market-oriented reforms, such as the adjustment of public sector prices and utility rates to reflect market conditions.
In 2014, the most important state-owned non-financial companies included Ecopetrol S.A., Medellín’s urban transit system (the “Medellín Metro”), the energy generation company Isagen and the energy transmission company ISA.
The following table sets forth selected financial data for the principal non-financial state-owned enterprises.
Principal Non-Financial Public Sector Enterprises
| Total Assets on Dec. 31, 2014(1) |
Total Liabilities on Dec. 31, 2014(1) |
Net Profits for 2014(2) |
Total External Dec. 31, 2014 |
|||||||||||||
| (millions of U.S. dollars) | ||||||||||||||||
| Ecopetrol S.A. |
$ | 59,425 | $ | 29,024 | $ | 3,755 | $ | 0 | ||||||||
| ISA |
12,119 | 6,707 | 297 | 0 | ||||||||||||
| Isagen |
3,578 | 1,802 | 218 | 219 | ||||||||||||
| Medellín Metro |
1,623 | 2,442 | (99 | ) | 62 | |||||||||||
| 1: | Audited. Converted into U.S. dollars at the rate of Ps. 2,392.46/$1.00, the representative market rate on December 31, 2014. |
| 2: | Converted into U.S. dollars at the rate of Ps. 2.000,03/$1.00, the average representative market rate for January-December 2014. |
| Source: | Directorate of Banking Investment – Ministry of Finance. |
Ecopetrol S.A.
Ecopetrol S.A., which underwent a restructuring in June 2003, is the national oil company and is responsible for promoting and developing Colombia’s oil industry. For further information on Ecopetrol S.A., see “—Principal Sectors of the Economy—Mining and Petroleum” above.
Ecopetrol S.A. earned net profits of approximately Ps. 7.8 trillion ($3.7 billion) in 2014. Total net profits decreased by 41% as compared to 2013. Ecopetrol S.A. contributes to public sector revenues through a combination of income taxes, royalties and dividends. Ecopetrol S.A.’s total direct contribution to governmental revenues was Ps. 26.2 trillion in 2014, as compared to Ps. 30.9 trillion in 2013. The principal sources of Ecopetrol S.A.’s contribution to public sector revenues during 2014 were approximately Ps. 8.2 trillion in royalties, Ps. 10.8 trillion in dividends paid with respect to profits earned in 2014, Ps. 6.5 trillion in income taxes and Ps. 0.5 trillion in indirect taxes.
ISA
ISA, the largest electricity transmission company in Colombia, owns a majority of the nation’s transmission networks and the national interconnection system. In 1995, ISA transferred its generation assets and functions to a new entity, Isagen. In August 1998, ISA made its first strategic portfolio investment with the capitalization of Transelca S.A. (“Transelca”), acquiring 65% of a company which accounts for 9.7% of the national transmission system. ISA consolidated its position in the market during 1999, by investing Ps. 276.6 billion and increasing its direct participation in the national transmission system to 75%. ISA’s tariffs and operational income are regulated by the Energy and Gas Regulatory Commission (“CREG”). ISA’s net profits in 2014 totaled Ps. 593.1 billion, as compared to Ps. 433.0 billion in 2013.
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ISA is the first public service company to be listed on a Colombian stock exchange and now has the second largest number of shareholders of any Colombian company. As of April 30, 2014 private shareholders owned 31.4% of ISA’s total equity and the Government owned 51.4% of ISA’s total equity. The remaining stake is owned by Empresas Públicas de Medellín (10.2%), Empresa de Energía de Bogotá (1.7%) and Ecopetrol S.A.(5.3%).
Since 2000, ISA has been implementing a significant expansion strategy, becoming the largest international energy transmission company in Latin America. ISA has a presence in Colombia, Brazil, Peru and Bolivia, participates in transmission infrastructure development in Panama and Central America and participates in interconnection projects in Ecuador and Venezuela. Additionally, ISA has diversified its activities to the telecommunications sector, specifically in fiber-optic communications.
Isagen
Isagen is a public service company engaged in the generation and sale of electricity. It has an installed capacity of 3,032 megawatts, of which 2,732 megawatts are derived from hydroelectric sources. Isagen owns and operates seven hydroelectric units and one thermal plant with an installed capacity equivalent to 16.7% of the national total. Isagen is the sole beneficiary of a trust which owns, and was responsible for the construction of, the Miel I hydroelectric power plant. This plant has a generating capacity of 396 megawatts and has been operational since the end of 2002.
With the goals of serving Colombia’s future energy demands, providing growth opportunities for Isagen and strengthening the National Electric Grid (SIN), Isagen implemented an expansion plan which culminated with the inauguration of the Sogamoso hydroelectric power plant in December 2014. This plant will increase Isagens’ installed capacity by 820 megawatts (MW) and will have average annual generation of 5,056 gigawatt-hours/year (GWh/year), from 2,212 MW to 3,032 MW and from 10,692 to 15,478 GWh/year, respectively.
In 2014, despite the low rainfall recorded, the Termocentro Power Plant generated 2,046.5 GWh, the most electric power generated in its history, an increase of 431.9 GWh as compared to 2013. Another important milestone was the anniversary of the San Carlos Hydroelectric Power Plant, which has the highest installed capacity in the country with 1,240 MW of installed capacity. In 2014, it completed 30 years of commercial operation in optimal operating conditions. Isagen operates the power plants in compliance with the Environmental Management Plan as required by Colombian legislation to prevent, minimize, control and compensate for biological, physical and social impacts. Isagen also carries out complementary environmental management in response to voluntary commitments so as improve the quality of life in the communities in the areas it influences.
In 2014, Isagen registered net profits of Ps. 436 billion ($218 million) as compared to Ps. 434.0 billion ($232 million) in 2013. Net profit was 1% up compared to 2013, offset by interest paid on debt associated with the construction of the Sogamoso hydroelectric power plant.
In 2000, the Government focused on the financial restructuring of the company in order to be able to offer it to potential buyers. As part of this process, in April 2000, Isagen purchased the interests of all the other shareholders of the Miel I project, thus becoming the sole owner of Miel I. In addition, in June 2000, one of Isagen’s most important liabilities, a $238 million loan from the IADB, was assumed by the Central Government. On February 26, 2007, the Government authorized the sale of 19.2% of the shares of Isagen. On August 3, 2007, the Government announced that it had completed the sale of such shares to the public. Following the sale, the Government owns 57.7% of the shares of Isagen.
Before the partial privatization of Isagen, 46.6% of Colombia’s total electricity generating capacity was privately owned. As of December 31, 2012, private sector ownership was 46.3%, as compared to only 1.0% in 1995.
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On July 30, 2013, the Government announced its intention to sell its remaining interest in Isagen (57.7% of the total shares of Isagen). On August 12, 2014, the Government decided to extend the privatization of Isagen up to a year because several bidders requested additional time to review the decision to acquire a controlling interest in Isagen and the extra time would allow for the completion of the Sogamoso hydroelectric project.
On May 14, 2015, the State Council ordered a temporary suspension of the sale of Isagen. The suspension was ordered to avoid further damage to public interest. The Government postponed the auction to private investors scheduled for May 19, 2015. While the Government has taken the necessary legal actions to proceed with the divestiture, the State Council has denied permission to proceed with the sale. The Minister of Finance and the Minister of Mines have filed an appeal to the Supreme Court.
Colombia Telecomunicaciones S.A. ESP
In response to the challenges associated with competition in the long distance market and after undergoing a major restructuring that lasted several years, the Government announced in June 2003 the liquidation of Empresa Nacional de Telecomunicaciones, or Telecom, and the creation of Colombia Telecomunicaciones S.A. ESP, which remained state-owned and provided the same services as its predecessor.
Colombia Telecomunicaciones S.A. ESP is a public service company organized as a stock company. It is a full-service telecommunications provider offering a range of integrated telecommunications services including fixed-line, mobile, data transmission (including broadband access and value-added services) and subscription television services throughout Colombia. It is the second-largest integrated telecommunications provider in Colombia in terms of subscribers and revenues, and, as of December 31, 2014, it operated the largest fixed-line network in Colombia in terms of geographical coverage.
On December 20, 2005, Colombia Telecomunicaciones S.A. ESP announced that it was seeking a strategic partner in order to obtain new capital, improve management, widen its service portfolio and guarantee the continuation of service in the long term. On April 7, 2006, Telefonica of Spain became a strategic partner after it purchased more than fifty percent of the company’s shares for Ps. 853.6 billion (approximately $369 million) in an auction process. The remaining capital of Colombia Telecomunicaciones S.A. ESP continues to be held by the Government. As a result of the recapitalization, Colombia Telecomunicaciones S.A. ESP became a private company and accordingly was no longer subject to regulation as a public sector entity.
In April 2011, the board of directors of Colombia Telecomunicaciones S.A. ESP approved the merger of the company with Telefónica Móviles de Colombia. In April 2012, the shareholders of the company approved the merger. The merger took place in the second half of 2012, reducing the Government’s participation in the company from 48% of total shares to 30% of total shares while Telefónica holds 70%. The merger was structured as part of a strategy to strengthen the financial condition of Colombia Telecomunicaciones S.A. ESP and to create one of the largest integrated telecommunications operators in Colombia. Colombia Telecomunicaciones S.A. ESP offers all of telecommunications services under the brand Movistar. As of December 31, 2014, the Ministry of Finance continued to hold 30.0% of the shares of Colombia Telecomunicaciones S.A. ESP. In 2014, Colombia Telecomunicaciones S.A. ESP registered net profits of approximately Ps 11.3 billion, as compared to net loss of Ps 262.0 billion in 2013.
Medellín Metro
Medellín Metro is the light rail transportation system of the state-owned Empresa de Transporte Masivo del Valle de Aburrá Ltda. (Aburrá Valley Mass Transit Corporation), an entity created in 1979 by the Department of Antioquia and the municipality of Medellín, each of which owns 50% of the entity’s shares. The Government guaranteed all of the Medellín Metro project’s external debt, which totaled $43 million as of December 31, 2014. The first line of the Medellín Metro became operational in November 1995. In 2014, the
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Medellín Metro was responsible for transporting 234.9 million passengers. In 2014, Empresa de Transporte Masivo del Valle de Aburrá Ltda. continued to be on a path to environmentally sustainable mobility, with the goal of improving the quality of life of its users by various initiatives including use of clean fuels, lowering emissions, building public spaces and improving the efficiency of its schedules as provided for in its Plan Maestro 2006-2030 “Confianza en el Futuro” (2006 –2030 Master Plan “Trust in the Future”).
Medellín Metro registered a net loss of Ps. 197.2 billion ($82.6 million) in 2014, as compared to a net loss of Ps. 193.1 billion ($103 million) in 2013.
State-Owned Financial Institutions
The Government owns a substantial majority of the capital stock of several financial institutions, although it intends to decrease its participation in the financial system over the medium term, providing assistance only to specific sectors of the Colombian economy. Some of the most important state-owned financial institutions are National Development Finance S.A. (FDN) (formerly, Financiera Eléctrica Nacional (FEN)), Banco de Comercio Exterior de Colombia S.A. (“Bancoldex”) and Finagro. FDN is primarily intended to promote, finance and support investment by companies or projects for infrastructure development in Colombia in different sectors of the economy. Bancoldex’s principal activity is to provide long- and short-term financing and specialized financial products to support Colombian exports and foreign trade-related activities. Finagro is the financial entity in charge of implementing financial programs for the agricultural sector. The accounts of FDN, Bancoldex, Finagro and other financial institutions owned by the Government are not included in the consolidated public sector finance figures that appear in other sections of this document.
In 2003, the Government liquidated Instituto de Fomento Industrial (IFI), a state-owned financial institution. IFI’s principal activities included providing venture capital and loans on favorable terms to mid-sized and large businesses to support industrial development.
The following table sets forth the total assets, total liabilities and total external debt guaranteed by the Republic for principal state-owned financial institutions as of December 31, 2014, as well as their net profits for 2014.
Principal State-Owned Financial Institutions
| Total Assets as of December 31, 2014(1) |
Total Liabilities as of December 31, 2014(1) |
Net Profits for 2014(1) |
Total External Debt Guaranteed by the Republic as of December 31, 2014(1) |
|||||||||||||
| (millions of U.S. dollars) | ||||||||||||||||
| State-Owned Banks |
||||||||||||||||
| Banco Agrario |
8,818 | 8,668 | 202 | 0 | ||||||||||||
| Commercial Financing Companies |
||||||||||||||||
| Bancoldex Leasing |
209 | 188 | 3 | 0 | ||||||||||||
| Special State-Owned Institutions |
20,698 | 17,634 | 3,065 | 735 | ||||||||||||
| Bancoldex |
2,636 | 2,038 | 597 | 281 | ||||||||||||
| Findeter |
3,116 | 2,715 | 401 | 200 | ||||||||||||
| FDN |
275 | 4 | 271 | 0 | ||||||||||||
| Finagro |
3,380 | 3,045 | 335 | 0 | ||||||||||||
| Icetex |
11 | 1 | 9 | 254 | ||||||||||||
| Fonade |
781 | 726 | 55 | 0 | ||||||||||||
| Fogafin |
4,962 | 4,781 | 182 | 0 | ||||||||||||
| Fondo Nacional del Ahorro |
2,699 | 1,771 | 929 | 0 | ||||||||||||
| Fogacoop |
205 | 174 | 31 | 0 | ||||||||||||
| Fng |
359 | 186 | 173 | 0 | ||||||||||||
| Caja de Vivienda Militar |
2,275 | 2,193 | 82 | 0 | ||||||||||||
| Total |
$ | 29,726 | $ | 26,490 | $ | 3,269 | $ | 734 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
Totals may differ due to rounding.
| 1: | Converted into dollars at the rate of Ps 2,392,46/$1.00, the representative market rate on December 31, 2014. |
| Source: | Financial Superintendency and financial statements of each company as of and for the year ended December 31, 2014. |
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Privatizations and Concessions
The following table lists the entities privatized since 2008, including the year in which the privatization occurred and the proceeds from the privatization for each enterprise.
Privatization of State-Owned Enterprises
| Year | Proceeds | |||||||
| (millions of U.S. dollars) | ||||||||
| IFI Enterprises |
||||||||
| Electrical |
||||||||
| ESSA(1) |
2009 | 145 | ||||||
| CENS(1) |
2009 | 70 | ||||||
| EEC(1) |
2009 | 82 | ||||||
| EBSA(3) |
2011 | 417 | ||||||
| Others |
||||||||
| Devinorte(2) |
2009 | 15 | ||||||
| 1: | The value has been translated into dollars at a rate of Ps. 2,575.5/$1.00, which was the exchange rate on February 26, 2009. |
| 2: | The value has been translated into dollars at a rate of Ps. 2,016.17/$1.00, which was the exchange rate on December 11, 2009. |
| 3: | The value has been translated into dollars at a rate of Ps. 1,938.52/$1.00, which was the exchange rate on December 29, 2011. |
| Sources: | Consejo Superior de Política Fiscal (Council of Fiscal Policy) and IFI, Subdirección de Banca de Inversión - Ministerio de Hacienda y Crédito Público. |
In order to foster private sector participation in public utility projects, the 1994 Ley de Servicios Públicos Domiciliarios (Residential Public Services Law) establishes the general framework for public utility services provided by both public and private sector companies. In addition to authorizing the privatization of public utility companies, the law permits consumers to purchase shares in those companies in installments. For example, consumers may pay for their share purchases through periodic payments in conjunction with utility bill payments.
Under the Constitution and Law 226 of 1995, all of the shares of any public entity being privatized must first be offered to its employees and to instituciones solidarias (social solidarity institutions), such as pension funds, cooperatives, mutual funds and severance funds, before they can be offered publicly to investors.
For more information on the privatization of electric power companies, see “—Principal Sectors of the Economy—Energy.”
The Government has also granted concession contracts to facilitate private participation in telecommunications and infrastructure projects. Infrastructure projects eligible for concession contracts include ports, railroads, airports and gas pipelines. In telecommunications, the Government has opened the market for cellular telephone services and “value-added” services, which include internet access, video services and electronic payment systems, and permits competition in domestic and international long distance, as well as local telephone services.
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In August 2008, Electrificadora del Quindio S.A. –EDEQ was sold for $21.8 million to EPM Inversiones. In September 2008, Central Hidroelectrica de Caldas –CHEC was sold to EPM Inversiones, the State of Caldas and others for $122.4 million.
In February 2009, the Government sold its interest in the following companies: Electrificadora de Santander S.A. (“ESSA”) to EPM Inversiones and the State of Santander for $145 million; Centrales Electricas del Norte de Santander S.A. for $69.9 million to EPM Inversiones and the State of Norte de Santander; and Empresa de Energia de Cundinamarca S.A. to Empresa de Energia de Bogotá and the State of Cundinamarca for $82.0 million. In December 2009, the Instituto de Fomento Industrial –IFI (Industrial Promotion Institute) sold its interest in Desarrollo Víal del Norte de Bogotá, to the other members of the project for $15 million.
In December 2011, the Government sold its interest in Empresa de Energia de Boyaca ESP to BCIF Holding Colombia S.A for $417 million.
Environment
Colombia, by virtue of its geographical location at the northwestern tip of South America, with mountainous regions, coasts on two oceans and the Amazon basin, has one of the most complex and diverse ecological and biological systems in the world. However, the pressures caused by growth and development have resulted in the exploitation of natural resources, and production methods directed at short-term productivity have been used without considering the environmental consequences. The principal environmental problems in Colombia today consist of soil erosion in the Andes; water, soil and air pollution in the Andes and the Caribbean region; and deforestation and instability of the water supply throughout the country.
In 1993, the Ministry of the Environment assumed responsibility for all environmental matters. The creation of a separate ministry had increased environmental regulations and centralized national environmental policymaking.
Decree 216 of February 3, 2003 merged the Ministry of Environment with the Ministry of Housing and established the objective and organic structure of the Ministry of Environment, Housing and Regional Development. In 2011, the Ministry of Environment, Housing and Regional Development was reorganized, with some functions assigned to other government agencies and certain responsibilities retained by the renamed Ministry of Environment and Sustainable Development. The objective of the Ministry is to contribute and promote sustainable development through policies, plans, programs, projects and regulation related to environment, natural renewable resources, land use, territorial organization, potable water, urban and regional development and housing.
The rainy season that affected the country in 2010 and continued during the first half of 2011 changed the direction of environmental policy towards humanitarian aid, rehabilitation and reconstruction, redistribution of resources and the need to rethink prevention strategies to avoid adverse consequences of future environmental disasters. This has supported by the Plan Nacional de Desarrollo (National Plan for Development) 2010-2014.
Additionally, while increased economic growth has contributed significantly to improving the quality of life of many Colombians, it has been accompanied by environmental degradation and deepening of problems such as deforestation and water and air pollution. The Santos administration, specifically through the Ministry of Environment and Sustainable Development, has established strategic guidelines for environmental sustainability that include the protection of areas of special ecological relevance, the development of policies for conservation and recovery of biodiversity, the strengthening of management of water resources, the execution of a national policy on climate change, the reinforcement of institutions for improved risk prevention and immediate response to disasters and the development of strategies for environmental management in agricultural and mining industries.
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The PDN approved in June 2015 now includes as one of the six strategies of the Government, Crecimiento Verde (Green Growth), a program promoting research, technological development and innovation for strengthening national and regional competitiveness with products and activities that contribute to sustainable development and growth with a low carbon footprint.
Employment and Labor
Beginning in March 2001, Colombia’s unemployment surveys have been presented on a monthly basis, and are based on a sample of 13 cities. The following are results for 2010 through April 2015.
Employment Status in the Thirteen Largest Cities(1)
| 2010 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Jan | Feb | Mar | Apr | May | June | July | Aug | Sept | Oct | Nov | Dec | |||||||||||||||||||||||||||||||||||||
| Labor Force (in thousands) |
10,390 | 10,398 | 10,342 | 10,442 | 10,432 | 10,500 | 10,676 | 10,519 | 10,748 | 10,727 | 10,799 | 10,715 | ||||||||||||||||||||||||||||||||||||
| Employed (in thousands)(2) |
8,801 | 8,999 | 9,065 | 9,145 | 9,097 | 9,156 | 9,253 | 9,238 | 9,507 | 9,531 | 9,650 | 9,505 | ||||||||||||||||||||||||||||||||||||
| Participation Rate (%)(3) |
65.2 | 65.2 | 64.7 | 65.2 | 65.1 | 65.4 | 66.4 | 65.3 | 66.7 | 66.4 | 66.8 | 66.2 | ||||||||||||||||||||||||||||||||||||
| Unemployment Rate (%)(4) |
15.3 | 13.5 | 12.4 | 12.4 | 12.8 | 12.8 | 13.3 | 12.2 | 11.5 | 11.2 | 10.6 | 11.3 | ||||||||||||||||||||||||||||||||||||
| Underemployment Rate (%)(5) |
13.3 | 14.4 | 14.1 | 12.8 | 13.4 | 13.5 | 14.5 | 14.4 | 13.6 | 14.8 | 12.7 | 12.0 | ||||||||||||||||||||||||||||||||||||
| 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Jan | Feb | Mar | Apr | May | June | July | Aug | Sept | Oct | Nov | Dec | |||||||||||||||||||||||||||||||||||||
| Labor Force (in thousands) |
10,573 | 10,702 | 10,762 | 10,789 | 10,737 | 10,905 | 10,933 | 10,771 | 11,085 | 11,313 | 11,156 | 11,092 | ||||||||||||||||||||||||||||||||||||
| Employed (in thousands)(2) |
9,017 | 9,289 | 9,445 | 9,519 | 9,557 | 9,621 | 9,698 | 9,651 | 9,950 | 10,162 | 10,007 | 9,939 | ||||||||||||||||||||||||||||||||||||
| Participation Rate (%)(3) |
65.2 | 65.9 | 66.2 | 66.3 | 65.8 | 66.8 | 66.9 | 65.8 | 67.6 | 68.9 | 67.8 | 67.4 | ||||||||||||||||||||||||||||||||||||
| Unemployment Rate (%)(4) |
14.7 | 13.2 | 12.2 | 11.8 | 11.0 | 11.8 | 11.3 | 10.4 | 10.2 | 10.2 | 10.3 | 10.4 | ||||||||||||||||||||||||||||||||||||
| Underemployment Rate (%)(5) |
12.1 | 13.9 | 13.9 | 13.1 | 12.2 | 12.4 | 12.8 | 12.8 | 12.3 | 13.0 | 13.6 | 11.6 | ||||||||||||||||||||||||||||||||||||
| 2012 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sept | Oct | Nov | Dec | |||||||||||||||||||||||||||||||||||||
| Labor Force (in thousands) |
10,993 | 10,907 | 11,227 | 11,071 | 11,318 | 11,318 | 11,414 | 11,295 | 11,266 | 11,382 | 11,414 | 11,254 | ||||||||||||||||||||||||||||||||||||
| Employed (in thousands)(2) |
9,532 | 9,548 | 9,994 | 9,812 | 9,976 | 10,036 | 10,101 | 10,113 | 10,060 | 10,225 | 10,290 | 10,103 | ||||||||||||||||||||||||||||||||||||
| Participation Rate (%)(3) |
66.7 | 66.1 | 67.9 | 66.9 | 68.3 | 68.2 | 68.7 | 67.8 | 67.6 | 68.2 | 68.3 | 67.2 | ||||||||||||||||||||||||||||||||||||
| Unemployment Rate (%)(4) |
13.3 | 12.5 | 11.0 | 11.4 | 11.9 | 11.3 | 11.5 | 10.5 | 10.7 | 10.2 | 9.8 | 10.2 | ||||||||||||||||||||||||||||||||||||
| Underemployment Rate (%)(5) |
11.9 | 12.9 | 13.0 | 13.7 | 13.1 | 13.2 | 12.9 | 12.5 | 12.5 | 12.0 | 11.5 | 10.9 | ||||||||||||||||||||||||||||||||||||
| 2013 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sept | Oct | Nov | Dec | |||||||||||||||||||||||||||||||||||||
| Labor Force (in thousands) |
11,279 | 11,235 | 11,267 | 11,203 | 11,469 | 11,375 | 11,503 | 11,527 | 11,375 | 11,386 | 11,544 | 11,492 | ||||||||||||||||||||||||||||||||||||
| Employed (in thousands)(2) |
9,804 | 9,853 | 9,995 | 10,001 | 10,272 | 10,104 | 10,350 | 10,344 | 10,254 | 10,394 | 10,468 | 10,383 | ||||||||||||||||||||||||||||||||||||
| Participation Rate (%)(3) |
67.3 | 66.9 | 67.0 | 66.6 | 68.1 | 67.4 | 68.1 | 68.1 | 67.2 | 67.1 | 68.0 | 67.6 | ||||||||||||||||||||||||||||||||||||
| Unemployment Rate (%)(4) |
13.1 | 12.3 | 11.6 | 10.7 | 10.4 | 11.2 | 10.0 | 10.3 | 9.9 | 8.7 | 9.3 | 9.7 | ||||||||||||||||||||||||||||||||||||
| Underemployment Rate (%)(5) |
11.7 | 12.9 | 12.4 | 12.6 | 12.6 | 12.7 | 12.4 | 12.8 | 11.0 | 11.8 | 11.6 | 10.2 | ||||||||||||||||||||||||||||||||||||
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| 2014 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sept | Oct | Nov | Dec | |||||||||||||||||||||||||||||||||||||
| Labor Force (in thousands) |
11,399 | 11,429 | 11,423 | 11,479 | 11,591 | 11,659 | 11,642 | 11,693 | 11,896 | 11,914 | 11,826 | 11,835 | ||||||||||||||||||||||||||||||||||||
| Employed (in thousands)(2) |
10,000 | 10,149 | 10,218 | 10,422 | 10,429 | 10,417 | 10,491 | 10,583 | 10,792 | 10,875 | 10,798 | 10,734 | ||||||||||||||||||||||||||||||||||||
| Participation Rate (%)(3) |
66.9 | 67.0 | 66.9 | 67.2 | 67.7 | 68.0 | 67.8 | 68.1 | 69.2 | 69.2 | 68.6 | 68.5 | ||||||||||||||||||||||||||||||||||||
| Unemployment Rate (%)(4) |
12.3 | 11.2 | 10.5 | 9.2 | 10.0 | 10.7 | 9.9 | 9.5 | 9.3 | 8.7 | 8.7 | 9.3 | ||||||||||||||||||||||||||||||||||||
| Underemployment Rate (%)(5) |
10.6 | 11.9 | 11.0 | 10.3 | 11.2 | 11.1 | 10.8 | 10.4 | 12.0 | 13.0 | 11.7 | 10.7 | ||||||||||||||||||||||||||||||||||||
| 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sept | Oct | Nov | Dec | |||||||||||||||||||||||||||||||||||||
| Labor Force (in thousands) |
11,742 | 11,663 | 11,790 | 11,858 | 11,838 | 11,749 | 11,837 | n.a. | n.a. | n.a. | n.a. | n.a. | ||||||||||||||||||||||||||||||||||||
| Employed (in thousands)(2) |
10,352 | 10,500 | 10,599 | 10,612 | 10,703 | 10,610 | 10,770 | n.a. | n.a. | n.a. | n.a. | n.a. | ||||||||||||||||||||||||||||||||||||
| Participation Rate (%)(3) |
67.9 | 67.4 | 68.0 | 68.3 | 68.1 | 67.5 | 68,0 | n.a. | n.a. | n.a. | n.a. | n.a. | ||||||||||||||||||||||||||||||||||||
| Unemployment Rate (%)(4) |
11.8 | 10.0 | 10.1 | 10.5 | 9.6 | 9.7 | 9.0 | n.a. | n.a. | n.a. | n.a. | n.a. | ||||||||||||||||||||||||||||||||||||
| Underemployment Rate (%)(5) |
11.3 | 10.6 | 11.0 | 12.5 | 12.4 | 11.4 | 11.4 | n.a. | n.a. | n.a. | n.a. | n.a. | ||||||||||||||||||||||||||||||||||||
| 1: | Statistics for the cities and metropolitan areas of Bogotá, Medellín, Cali, Barranquilla, Bucaramanga, Manizales, Pasto, Pereira, Cúcuta, Ibagué, Montería, Cartagena and Villavicencio. Average rates for each month. |
| 2: | To be considered employed, a person above the minimum age requirement must have worked at least one hour with remuneration or 15 hours without remuneration during the preceding week. The working age is 12 years and above. |
| 3: | Participation rate is defined as the labor force divided by working age population. The working age is 12 years and above. |
| 4: | Unemployment rate is defined as the unemployed population divided by the labor force. |
| 5: | Underemployment rate is defined as the underemployed population divided by the labor force. Underemployed workers are employed workers who can perform and want additional employment, either because they work fewer than 12 hours per week and desire to work more, they consider their income insufficient or they are employed in a position unrelated to their profession or training and are therefore underproductive. |
| n.a.: | Not available. |
| Source: | DANE. |
The following table shows national employment statistics for 2010 through April 2015.
National Employment Status
| 2010 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Jan | Feb | Mar | Apr | May | June | July | Aug | Sept | Oct | Nov | Dec | |||||||||||||||||||||||||||||||||||||
| Labor Force (in thousands) |
21,396 | 21,546 | 21,255 | 21,837 | 21,617 | 21,648 | 21,729 | 21,745 | 22,059 | 22,263 | 22,237 | 21,996 | ||||||||||||||||||||||||||||||||||||
| Employed (in thousands)(1) |
18,276 | 18,832 | 18,745 | 19,165 | 19,014 | 19,129 | 18,973 | 19,318 | 19,727 | 20,003 | 19,837 | 19,550 | ||||||||||||||||||||||||||||||||||||
| Participation Rate (%)(2) |
62.1 | 62.5 | 61.5 | 63.1 | 62.4 | 62.4 | 62.6 | 62.5 | 63.4 | 63.9 | 63.7 | 62.9 | ||||||||||||||||||||||||||||||||||||
| Unemployment Rate (%)(3) |
14.6 | 12.6 | 11.8 | 12.2 | 12.0 | 11.6 | 12.7 | 11.2 | 10.6 | 10.2 | 10.8 | 11.1 | ||||||||||||||||||||||||||||||||||||
| Underemployment Rate (%)(4) |
12.0 | 12.5 | 12.4 | 12.2 | 12.5 | 12.4 | 13.0 | 13.3 | 12.7 | 13.6 | 12.6 | 11.7 | ||||||||||||||||||||||||||||||||||||
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| 2011 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Jan | Feb | Mar | Apr | May | June | July | Aug | Sept | Oct | Nov | Dec | |||||||||||||||||||||||||||||||||||||
| Labor Force (in thousands) |
21,895 | 21,887 | 21,973 | 22,056 | 22,353 | 22,159 | 22,330 | 22,163 | 22,588 | 23,680 | 23,232 | 23,031 | ||||||||||||||||||||||||||||||||||||
| Employed (in thousands)(1) |
18,927 | 19,072 | 19,585 | 19,588 | 19,839 | 19,743 | 19,753 | 19,929 | 20,389 | 21,549 | 21,090 | 20,770 | ||||||||||||||||||||||||||||||||||||
| Participation Rate (%)(2) |
62.6 | 62.5 | 62.6 | 62.8 | 63.5 | 62.9 | 63.3 | 62.8 | 63.9 | 66.9 | 65.5 | 64.9 | ||||||||||||||||||||||||||||||||||||
| Unemployment Rate (%)(3) |
13.6 | 12.9 | 10.9 | 11.2 | 11.2 | 10.9 | 11.5 | 10.1 | 9.7 | 9.0 | 9.2 | 9.8 | ||||||||||||||||||||||||||||||||||||
| Underemployment Rate (%)(4) |
11.9 | 12.5 | 12.1 | 12.3 | 11.8 | 11.3 | 12.5 | 11.3 | 11.1 | 12.4 | 11.9 | 11.5 | ||||||||||||||||||||||||||||||||||||
| 2012 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sept | Oct | Nov | Dec | |||||||||||||||||||||||||||||||||||||
| Labor Force (in thousands) |
22,718 | 22,906 | 22,864 | 23,003 | 23,302 | 23,365 | 22,982 | 23,093 | 22,825 | 23,630 | 23,138 | 23,262 | ||||||||||||||||||||||||||||||||||||
| Employed (in thousands)(1) |
19,884 | 20,187 | 20,494 | 20,504 | 20,807 | 21,022 | 20,485 | 20,842 | 20,555 | 21,538 | 20,998 | 21,040 | ||||||||||||||||||||||||||||||||||||
| Participation Rate (%)(2) |
63.9 | 64.4 | 64.2 | 64.5 | 65.2 | 65.3 | 64.2 | 64.4 | 63.6 | 65.8 | 64.3 | 64.6 | ||||||||||||||||||||||||||||||||||||
| Unemployment Rate (%)(3) |
12.5 | 11.9 | 10.4 | 10.9 | 10.7 | 10.0 | 10.9 | 9.7 | 9.9 | 8.9 | 9.2 | 9.6 | ||||||||||||||||||||||||||||||||||||
| Underemployment Rate (%)(4) |
11.3 | 12.6 | 11.8 | 12.8 | 12.8 | 12.2 | 13.2 | 12.2 | 11.9 | 11.9 | 11.4 | 10.6 | ||||||||||||||||||||||||||||||||||||
| 2013 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sept | Oct | Nov | Dec | |||||||||||||||||||||||||||||||||||||
| Labor Force (in thousands) |
23,035 | 23,005 | 22,737 | 22,970 | 23,498 | 23,124 | 23,304 | 23,488 | 23,207 | 24,089 | 23,469 | 23,574 | ||||||||||||||||||||||||||||||||||||
| Employed (in thousands)(1) |
20,255 | 20,293 | 20,416 | 20,633 | 21,284 | 20,988 | 21,001 | 21,310 | 21,123 | 22.211 | 21,479 | 21,584 | ||||||||||||||||||||||||||||||||||||
| Participation Rate (%)(2) |
63.9 | 63.7 | 62.9 | 63.5 | 64.8 | 63.7 | 64.1 | 64.6 | 63.7 | 66.1 | 64.3 | 64.5 | ||||||||||||||||||||||||||||||||||||
| Unemployment Rate (%)(3) |
12.1 | 11.8 | 10.2 | 10.2 | 9.4 | 9.2 | 9.9 | 9.3 | 9.0 | 7.8 | 8.5 | 8.4 | ||||||||||||||||||||||||||||||||||||
| Underemployment Rate (%)(4) |
11.4 | 12.4 | 11.3 | 12.0 | 12.1 | 11.3 | 11.8 | 11.6 | 10.8 | 10.9 | 10.7 | 10.4 | ||||||||||||||||||||||||||||||||||||
| 2014 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sept | Oct | Nov | Dec | |||||||||||||||||||||||||||||||||||||
| Labor Force (in thousands) |
23,280 | 23,086 | 23,047 | 23,444 | 23,509 | 23,650 | 23,416 | 23,881 | 23,840 | 24,591 | 24,202 | 23,908 | ||||||||||||||||||||||||||||||||||||
| Employed (in thousands)(1) |
20,696 | 20,621 | 20,803 | 21,343 | 21,441 | 21,475 | 21,241 | 21,755 | 21,849 | 22,658 | 22,336 | 21,823 | ||||||||||||||||||||||||||||||||||||
| Participation Rate (%)(2) |
63.6 | 63.0 | 62.8 | 63.8 | 63.9 | 64.3 | 63.5 | 64.7 | 64.5 | 66.5 | 65.4 | 64.5 | ||||||||||||||||||||||||||||||||||||
| Unemployment Rate (%)(3) |
11.1 | 10.7 | 9.7 | 9.0 | 8.8 | 9.2 | 9.3 | 8.9 | 8.4 | 7.9 | 7.7 | 8.7 | ||||||||||||||||||||||||||||||||||||
| Underemployment Rate (%)(4) |
10.6 | 11.1 | 10.1 | 10.1 | 10.8 | 11.7 | 10.6 | 10.1 | 11.4 | 12.1 | 10.3 | 9.8 | ||||||||||||||||||||||||||||||||||||
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| 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sept | Oct | Nov | Dec | |||||||||||||||||||||||||||||||||||||
| Labor Force (in thousands) |
23.681 | 23.651 | 23.763 | 24.388 | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | ||||||||||||||||||||||||||||||||||||
| Employed (in thousands)(1) |
21.127 | 21.320 | 21.657 | 22.070 | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | ||||||||||||||||||||||||||||||||||||
| Participation Rate (%)(2) |
63.8 | 63.7 | 63.9 | 65.5 | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | ||||||||||||||||||||||||||||||||||||
| Unemployment Rate (%)(3) |
10.8 | 9.9 | 8.9 | 9.5 | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | ||||||||||||||||||||||||||||||||||||
| Underemployment Rate (%)(4) |
10.5 | 10.0 | 10.2 | 11.3 | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | ||||||||||||||||||||||||||||||||||||
| 1: | To be considered employed, a person above the minimum age requirement must have worked at least one hour with remuneration or 15 hours without remuneration during the preceding week. |
| 2: | Participation rate is defined as the labor force divided by working age population. The working age is 12 years and above. |
| 3: | Unemployment rate is defined as the unemployed population divided by the labor force. |
| 4: | Underemployment rate is defined as the underemployed population divided by the labor force. Underemployed workers are employed workers who can perform and want additional employment, either because they work fewer than 12 hours per week and desire to work more, they consider their income insufficient or they are employed in a position unrelated to their profession or training and are therefore underproductive. |
| n.a.: | Not available. |
| Source: | DANE. |
National Quarterly Employment Rates by Gender
| 2011 | 2012 | 2013 | 2014 | |||||||||||||||||||||||||||||
| Women | Men | Women | Men | Women | Men | Women | Men | |||||||||||||||||||||||||
| First Quarter |
42.7 | % | 67.4 | % | 45.3 | % | 68.7 | % | 44.8 | % | 68.3 | % | 45.3 | % | 68.3 | % | ||||||||||||||||
| Second Quarter |
44.6 | 68.1 | 47.6 | 69.3 | 47.5 | 68.7 | 47.8 | 69.2 | ||||||||||||||||||||||||
| Third Quarter |
45.3 | 68.6 | 46.4 | 69.2 | 47.5 | 69.2 | 48.1 | 69.5 | ||||||||||||||||||||||||
| Fourth Quarter |
48.1 | 71.7 | 47.5 | 70.8 | 48.5 | 71.2 | 49.2 | 71.6 | ||||||||||||||||||||||||
Source: DANE.
D-47
National Quarterly Employment Rates by Sector
| 2011 | ||||||||||||||||
| First Quarter |
Second Quarter |
Third Quarter |
Fourth Quarter |
|||||||||||||
| Agriculture, fishing, hunting and forestry |
18.6 | % | 17.6 | % | 17.6 | % | 18.8 | % | ||||||||
| Mining and quarrying |
1.0 | % | 1.4 | % | 1.6 | % | 0.8 | % | ||||||||
| Manufacturing |
12.5 | % | 13.4 | % | 12.7 | % | 13.5 | % | ||||||||
| Electricity, gas and water supply |
0.5 | % | 0.5 | % | 0.6 | % | 0.6 | % | ||||||||
| Construction |
5.6 | % | 5.4 | % | 5.9 | % | 5.9 | % | ||||||||
| Retail, hotels and restaurants |
26.6 | % | 26.6 | % | 26.1 | % | 26.3 | % | ||||||||
| Transport, storage and communications |
8.8 | % | 8.2 | % | 8.2 | % | 8.0 | % | ||||||||
| Financial intermediation |
1.2 | % | 1.2 | % | 1.2 | % | 1.1 | % | ||||||||
| Real estate, renting and business activities |
6.4 | % | 6.7 | % | 6.5 | % | 6.4 | % | ||||||||
| Community, social and personal services |
18.7 | % | 19.0 | % | 19.5 | % | 18.5 | % | ||||||||
| Total |
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
| 2012 | ||||||||||||||||
| First Quarter |
Second Quarter |
Third Quarter |
Fourth Quarter |
|||||||||||||
| Agriculture, fishing, hunting and forestry |
17.9 | % | 16.9 | % | 17.2 | % | 18.0 | % | ||||||||
| Mining and quarrying |
0.9 | % | 1.3 | % | 1.4 | % | 0.9 | % | ||||||||
| Manufacturing |
13.0 | % | 13.2 | % | 12.3 | % | 12.9 | % | ||||||||
| Electricity, gas and water supply |
0.6 | % | 0.5 | % | 0.5 | % | 0.6 | % | ||||||||
| Construction |
6.2 | % | 5.9 | % | 5.8 | % | 6.1 | % | ||||||||
| Retail, hotels and restaurants |
26.6 | % | 26.9 | % | 26.6 | % | 26.9 | % | ||||||||
| Transport, storage and communications |
8.6 | % | 8.1 | % | 8.7 | % | 7.9 | % | ||||||||
| Financial intermediation |
1.4 | % | 1.2 | % | 1.2 | % | 1.2 | % | ||||||||
| Real estate, renting and business activities |
6.2 | % | 6.5 | % | 7.2 | % | 6.9 | % | ||||||||
| Community, social and personal services |
18.6 | % | 19.6 | % | 19.1 | % | 18.6 | % | ||||||||
| Total |
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
| 2013 | ||||||||||||||||
| First Quarter |
Second Quarter |
Third Quarter |
Fourth Quarter |
|||||||||||||
| Agriculture, fishing, hunting and forestry |
17.7 | % | 16.1 | % | 16.7 | % | 17.0 | % | ||||||||
| Mining and quarrying |
1.2 | % | 1.1 | % | 1.3 | % | 0.6 | % | ||||||||
| Manufacturing |
11.8 | % | 12.7 | % | 11.6 | % | 12.0 | % | ||||||||
| Electricity, gas and water supply |
0.5 | % | 0.5 | % | 0.5 | % | 0.5 | % | ||||||||
| Construction |
5.5 | % | 5.5 | % | 5.8 | % | 6.4 | % | ||||||||
| Retail, hotels and restaurants |
27.8 | % | 27.1 | % | 27.3 | % | 27.6 | % | ||||||||
| Transport, storage and communications |
8.6 | % | 8.6 | % | 8.0 | % | 7.9 | % | ||||||||
| Financial intermediation |
1.3 | % | 1.3 | % | 1.5 | % | 1.4 | % | ||||||||
| Real estate, renting and business activities |
7.2 | % | 7.1 | % | 7.1 | % | 6.9 | % | ||||||||
| Community, social and personal services |
18.4 | % | 20.1 | % | 20.0 | % | 19.6 | % | ||||||||
| Total |
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
| 2014 | ||||||||||||||||
| First Quarter |
Second Quarter |
Third Quarter |
Fourth Quarter |
|||||||||||||
| Agriculture, fishing, hunting and forestry |
16.4 | % | 15.6 | % | 16.6 | % | 16.4 | % | ||||||||
| Mining and quarrying |
1.0 | % | 1.1 | % | 1.1 | % | 0.7 | % | ||||||||
| Manufacturing |
11.8 | % | 12.3 | % | 11.6 | % | 12.3 | % | ||||||||
| Electricity, gas and water supply |
0.6 | % | 0.6 | % | 0.5 | % | 0.6 | % | ||||||||
| Construction |
5.9 | % | 5.9 | % | 5.9 | % | 6.5 | % | ||||||||
| Retail, hotels and restaurants |
27.7 | % | 27.2 | % | 27.0 | % | 27.2 | % | ||||||||
| Transport, storage and communications |
8.6 | % | 8.3 | % | 8.1 | % | 8.3 | % | ||||||||
| Financial intermediation |
1.4 | % | 1.3 | % | 1.5 | % | 1.2 | % | ||||||||
| Real estate, renting and business activities |
6.9 | % | 7.2 | % | 7.6 | % | 7.4 | % | ||||||||
| Community, social and personal services |
19.7 | % | 20.6 | % | 20.1 | % | 19.3 | % | ||||||||
| Total |
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
Source: DANE. Calculations: Ministry of Finance.
D-48
The average unemployment rate for June 2015 in the 13 largest urban areas was 9.7% as compared to 10.7% for the same period in 2014. The retail, hotels and restaurants and community, social and personal services subsectors and the agriculture, hunting, forestry and fishing sector accounted for the most employment. The average unemployment rate for December 2014 in the same urban areas was 9.3%, as compared to 9.7% for the same month in 2013. The national unemployment rate for April 30, 2015 was 9.5%, an increase from the unemployment rate of 9.0% on April 30, 2014. On December 31, 2014, the national unemployment rate was 8.7%, an increase from the unemployment rate of 8.4% on December 31, 2013 and a decrease from the unemployment rate of 9.6% on December 31, 2012. Although the months of June, July and December of 2014 witnessed marginal increases in the monthly national unemployment rate from the preceding month, the national unemployment rate decreased significantly during 2014 as a whole, from 11.1% in January 2014 to 8.7% in December 2014. Moreover, the unemployment rate in the 13 largest cities has been declining during the past years, recording 11.3% in December 2010, 10.4% in December 2011, 10.2% in December 2012, 9.7% in December 2013 and 9.3% in December 2014. The 13 largest cities national unemployment rate also experienced a general decreasing trend during 2014, beginning at 12.3% in January 2014 and ending at 9.3% in December 2014.
In December 1990, the Government enacted legislation to permit greater flexibility in labor contracts by eliminating ambiguities over non-wage benefits and eliminating restrictions regarding severance and furlough of workers. The same law also modified the unemployment benefits system to allow workers to elect private sector management of their severance funds. The Colombian Labor Code now requires employers, on an annual basis, to transfer severance payments equal to one month of salary plus 12% interest to the severance administration fund chosen by each employee. Employees only have access to these severance funds upon termination of their employment or, prior to termination, under special circumstances, including the purchase or improvement of a residence and the payment of qualifying tuition payments. A severance fund becomes available regardless of whether an employee is terminated involuntarily or resigns; the fund is not conditioned on unemployment. Colombia does not have an unemployment fund. However, Law 1636 of 2013 established the Loss Protection Mechanism (Mecanismo de Protección al Cesante), which seeks to assist the unemployed through a series of policies and initiatives to mitigate the effects of unemployment and facilitate their reintroduction to the work force, including receipt of monetary benefits, if eligible.
Under legislation enacted in 1993 to partially privatize the pension system, employees may elect that their pension contributions (both employee and employer derived) be deposited with private pension administrators. If no such election is made, the funds will continue to be managed by the Instituto de Seguros Sociales (Social Security Institute, or “ISS”). The Government guarantees both privately managed pensions and the ISS fund. The partial privatization of the pension system was intended to increase the efficiency of pension management, while injecting a new source of funds into local capital markets. The privately administered pension funds have more investment flexibility, having investment options including government obligations, certificates of deposit, bonds, commercial paper and, up to certain limits, equity securities. The 1993 law also allowed private companies to offer health and worker’s compensation insurance.
Because of a pension reform approved in 2002, starting in 2014, the retirement age has been raised from 60 to 62 for men and from 55 to 57 for women. The minimum number of weekly pension payments required for retirement has been gradually increased from 1,000 in 2005 to 1,300 in 2015.
D-49
Wages for workers in the public sector are customarily established at the beginning of each calendar year. Private sector wages are subject to the minimum wage set annually by the Government at the beginning of each calendar year. The following table shows the monthly minimum wage rates set by the Government and the real wage index for each of the years indicated:
Monthly Minimum Wage and Real Wage Index
| Year |
Monthly Minimum Wage |
Percentage change | Real Wage Index(1) | |||||||||
| (in nominal pesos) | (2014=100) | |||||||||||
| 2010 |
515,000 | 3.6 | 93,8 | |||||||||
| 2011 |
535,600 | 4.0 | 94,0 | |||||||||
| 2012 |
566,700 | 5.8 | 97,2 | |||||||||
| 2013 |
589,500 | 4.0 | 99,2 | |||||||||
| 2014 |
616,000 | 4.5 | 100,0 | |||||||||
| 2015 |
644,350 | 4,6 | 104,6 | |||||||||
| 1: | Real Wage Index is the nominal monthly minimum wage corrected for changes in purchasing power measured by the consumer price index. |
Sources: Ministry of Social Security and DANE. Calculations by the General Directorate of Macroeconomic Policy – Ministry of Finance and Public Credit.
Poverty
In 2009, DANE and the National Planning Department (“DNP”) decided to consolidate and standardize the poverty and inequality time series data from 2002 to 2005 in order to make the data comparable with the data from the new survey introduced by DANE during the second half of 2006. Following the consolidation process, in August 2009, DNP released updated figures for poverty, homelessness and inequality for 2002 to 2008, excluding 2006 and 2007 because DNP determined that the information for 2006 was insufficient and 2007 was a transition year for the change in methodology. In September 2011, DNP released a new methodology that changed the poverty line and the construction of the family aggregate income. The following table shows the percentage of the population with incomes below the poverty line for the years indicated following the new methodology.
Poverty in Colombia(1)
(percentage of population below poverty line)
| 2010 |
37.2 | % | ||
| 2011 |
34.1 | % | ||
| 2012 |
32.7 | % | ||
| 2013 |
30.6 | % | ||
| 2014 |
28.5 | % |
| 1: | The poverty line is defined as the minimum level of income necessary to acquire an adequate amount of food and primary goods. Households whose annual income falls below that level are considered to be living in poverty. Households whose monthly income per-capita were lower than Ps. 211,807 for 2014, Ps. 206,091 for 2013, Ps. 202,083 for 2012, Ps. 194,696 for 2011, and Ps. 187,063 for 2010 were considered to be living in poverty. Households whose income per-capita was lower than Ps. 94,103 for 2014, Ps. 91,698 for 2013, Ps. 91,207 for 2012, Ps. 87,672 for 2011, and Ps.83,578 for 2010 were living in extreme poverty. |
| Source: | DANE. |
Although Colombia does not have a welfare system, the Government modified the pension system in 1993 to serve social welfare needs, as discussed above. For further discussion of the pension system, see “Public Sector Finance—Public Sector Accounts—Expenditures” below. Also in 1993, legislation created a decentralized health care system which should, in the long term, provide subsidized care to the entire population.
D-50
Other initiatives the Government has undertaken to alleviate poverty in Colombia include a program called “De cero a siempre”, which seeks to promote and ensure children’s comprehensive development from conception until the age of six. Furthermore, the Government has continued to develop the “Families in Action” program, a monetary transfer program that seeks to reduce poverty and income inequality by encouraging poor families to make certain commitments in education and health. The Government has also implemented the “Women Savers in Action Program”, which seeks to promote the autonomy and empowerment of women, as well as the “Income Generation and Employability Program”, which aims to provide job training and encourage entrepreneurship.
On May 28, 2015, President Santos presented the program called “Plan de Impulso a la Productividad y el Empleo” (Pipe 2.0) second phase. This plan seeks to stimulate the economy and mitigate the impact of the slowdown. This initiative seeks to generate investment in cross-sectors such as infrastructure, education, public works, housing, industry and mining. It includes almost Ps. 17 trillion of investment and is expected to create 300,000 jobs.
On January 19, 2011, the President signed into law the Health Reform Law that allocates more resources to the health system (Ps.1.5 trillion per year). The Government will contribute Ps.1.0 trillion from the national budget, and other resources are expected to come from the Family Compensation Funds (a non-governmental agency that pays social security subsidies), municipalities and departments, among others. The law will also order periodic updates to the public health insurance plans in order to make them consistent with the epidemiological profile of the population, limiting and rationalizing the type of treatments and drugs that are included in the insurance plans.
D-51
FOREIGN TRADE AND BALANCE OF PAYMENTS
General
According to statistics compiled by Banco de la República, total trade in goods, both exports and imports grew 21.0% in 2010, 39.4% in 2011 and 7.1% in 2012, decreased 0.7% in 2013 and increased 1.1% in 2014. The increase in trade in 2014 was mainly due to a 7.8% increase in imports which was offset by a decrease of 6.2% in exports. The decrease in exports in 2014 was mainly due to a decrease of 9.8% in exports of oil and its derivatives, and the increase in imports in 2014 was mainly due to an increase of 8.9% in imports of raw materials and intermediate goods. Direct investment decreased by 79.1% in 2010 to $947 million but increased by $5.3 billion in 2011, or 557.7%, as compared to 2010 due mainly to an increase in the net acquisition of financial assets in the commerce sector amounting to $2,324.8 million, and in the transportation and communications sector amounting to $2,115.9 million. Direct investment increased in 2012 by $9.4 billion, or 151.2%, as compared to 2011 due mainly to an increase in net acquisition of financial assets in the petroleum sector amounting to $771.1 million and in the manufacturing sector amounting to $771.3 million and a decrease in net incurrence of liabilities in the petroleum and mining sector amounting to $3,238.6 million and in the financial services sector amounting to $3,397 million. Direct investment decreased in 2013 by $7,089 million, or 45.3%, as compared to 2012 due mainly to a better performance of net acquisition of financial assets amounting to $8,258 million from 2012, mainly in the petroleum and mining sector amounting to $4,623.0 million and in the financial services sector amounting to $3,070.7 million. In 2014, direct investment increased $3,801 million, or 44.4%, mainly due to a decrease in net acquisition of financial assets principally in financial services amounting to $3,114.4 million. Banco de la República’s net international reserves increased by 12.2% in 2010, 13.5% in 2011, 16.0% in 2012, 16.5% in 2013 and 8.5% in 2014.
In June 2014, Banco de la República adopted the sixth edition of the IMF’s Balance of Payments Manual framework and which has been implemented in balance of payments statistics from 2000 onward. The key changes from the fifth edition to the sixth edition of the IMF’s Balance of Payments Manual methodology include the reclassification of accounts within the balance of payments. On the current account side, a financial intermediation services account (FISIM) has been created and is included within the services account. The corresponding information was previously incorporated in the income line. On the capital account side, loans between affiliates (for nonfinancial sector companies), which had previously been incorporated within the loans account, are now included in the direct investment account. Furthermore, changes in the format for the presentation of information have been incorporated. Additionally, measurements of exports in the table “Balance of Payments are different from the table “Exports (FOB) by Group of Products” and from the table “Trends in the Composition of Exports”, since these two latter tables do not incorporate special trade operations and commerce from the Free Trade Zones.
Balance of Payments
Colombia’s current account registered deficits from 2010 to 2014, recording shortfalls of $8,663 million in 2010, $9,710 million in 2011, $11,306 million in 2012, $12,367 million in 2013 and $19,549 million in 2014. For 2010, the trade surplus reached $2,356 million, a decrease of $193 million from the trade surplus recorded in 2009. The decrease in the trade surplus was due to an increase in imports of $6,978 million, mainly of consumer and intermediate goods. In 2011, the trade surplus reached $6,137 million, primarily due to an increase in exports of $17,500 million compared to 2010. In 2012, the trade surplus reached $4,956 million, a decrease of $1,181 million from the trade surplus recorded in 2011. The decrease in the trade surplus was due to an increase in consumer goods and raw materials and intermediate goods. For 2013, the trade surplus fell to $3,180 million, a decrease of $1,776 million from the trade surplus recorded in 2012. The decrease in trade surplus was due mainly to a decrease in exports of $1,323 million, mainly of coal and nontraditional products, such as gold. In 2014, the trade balance fell further to a deficit of $4,583 million a decline of $7,763 million from 2013 mainly due to a decrease of $3,254 million in exports primarily caused
D-52
by a decrease of oil and its derivatives exports, which decreased $3,126 million or 9.8%. Additionally there was an increase in imports of $4,509 million from 2013 driven mainly by an increase in imports of raw material and intermediate goods.
In 2010, 2011, 2012 and 2013, rising commodity prices, growth in Latin America and higher confidence in the region allowed capital flows to finance Latin America’s current account deficits, in particular foreign direct investment and payments of external debt. In Colombia, increasing domestic demand supported a growth in imports from 2010 to 2014, while exports were also increasing during those same years (except in 2013 and 2014 when exports decreased) due to higher international commodity prices. However, during 2014 international commodity prices decreased, including oil prices, which decreased from $107.6 per barrel during mid-July to $53.3 per barrel at the end of 2014, a 51% decrease in six months. The lower international commodity prices affected exports, which in 2014 recorded a decrease of 8.8% (with a decrease in the fourth quarter of 19.9% year-over-year), mostly as a result of the decline in prices of major goods from mining, especially oil during the last quarter.
In recent years, Colombia has registered deficits in the primary income of the current account because inflows from its foreign assets have not been sufficient to offset the interest payable on its foreign liabilities. Each of the last five years ended with a deficit: $11,229 million in 2010, $15,499 million in 2011, $15,046 million in 2012, $14,216 million in 2013 and $12,685 million in 2014. The secondary income category, however, registered inflows of $4,448 million in 2010, $4,834 million in 2011, $4,579 million in 2012, $4,594 million in 2013 and $4,358 million in 2014. Colombia has also continued to experience deficits in the services category in recent years because of decreased participation by Colombian shipping companies in the international freight market, falling international transport fares, reduced income from tourism and increased costs related to business and construction activities. During 2014, the deficit was mainly due to a decrease in transport services with cargo shipping accounting for about 64% of the decline. Net payments abroad for business services and insurance and financial services also contributed to the current account deficit.
In 2010, Colombia registered a capital account deficit of $9,275 million, which was 83.3% higher than the deficit in 2009. Total foreign investment in 2010 decreased by 69.5% as compared to 2009, from $6,292 million to $1,920 million. Net foreign direct investment decreased by $3,583 million and net portfolio investment inflows decreased by $789 million. The capital account stood at a deficit of $8,925 million in 2011, which is 3.8% lower than the deficit in 2010. In 2011, total foreign investment increased by 641.7% as compared to 2010, from $1,920 million to $12,318 million. Net foreign direct investment increased by $5,281 million and net portfolio investment inflows increased by $5,118 million in 2011 compared to 2010. The capital account stood at a deficit of $11,754 million in 2012, which is 31.7% higher than the deficit in 2011. In 2012, total foreign investment increased by 73.2% as compared to 2011, from $12,318 million to $21,335 million. Net foreign direct investment increased by $9,418 million and net portfolio investment inflows decreased by $401 million in 2012 compared to 2011. In 2013, Colombia registered a capital account deficit of $11,845 million, which is 0.8% higher than the deficit in 2012. In 2013, total foreign investment decreased by 27.2% as compared to 2012, from $21,335 million to $15,534 million. Net foreign direct investment decreased by 45.3% or $7,089 million compared to 2012 and net portfolio investment inflows increased by $1,288 million in 2013 compared to 2012. In 2014, Colombia registered a capital account deficit of $19,745 million, which is 66.7% higher than the deficit in 2013. In 2014, total foreign investment increased by 54.6% as compared to 2013, from $15,534 million to $24,012 million. Net foreign direct investment increased by 44.4% compared to 2013 and net portfolio investment increased $4,676 million in 2014 compared to 2013. This increase in the capital account was due to higher portfolio investment inflows, which accounted for $18,661 million, principally local transactions.
The capital account of Colombia’s balance of payments includes direct investment flows, portfolio investment flows and net changes in external indebtedness. Liberalized foreign investment regulations and aggressive privatization programs contributed to a significant increase in net foreign direct investment (i.e., foreign direct investment in Colombia less direct investment by Colombians abroad), as measured for balance of payments purposes, from 2010 to 2014, although there were decreases experienced in 2010 and 2013. Net foreign direct investment reached $947 million in 2010, $6,228 million in 2011, $15,646 million in 2012, $8,557 million in 2013 and $12,358 million in 2014. Given that the net incurrence of liabilities remained stable from 2013 to 2014, the increase was mainly due to a decrease in net acquisition of financial assets
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principally in financial services amounting a decrease of $3,114.4 million. The level of net foreign direct investment in 2013 was influenced by the purchase of Ecopetrol shares abroad. Net foreign direct investment decreased to $947 million in 2010 primarily due to lower investment in the mining, commerce and transportation and communication sectors compared to 2009. The mining and petroleum sectors, however, reported inflows of foreign investment in 2011, reaching approximately $7,180 million. In 2012, the mining, petroleum and manufacturing sectors continued reporting inflows of foreign investment reaching $9,930 million. Conversely, during 2013 and 2014 the petroleum sector reported a decrease in inflows of foreign investment of $359 million and $274 million respectively.
The table below sets forth data on Colombia’s balance of payments as compiled in accordance with the sixth edition IMF methodology currently employed by Banco de la República.
Balance of Payments (1)(2)(3)(4)
| Account | 2010 | 2011 | 2012 | 2013 | 2014 | |||||||||||||||
| Current account |
-8,663 | -9,710 | -11,306 | -12,367 | -19,549 | |||||||||||||||
| Credit |
52,858 | 72,233 | 77,269 | 76,227 | 73,165 | |||||||||||||||
| Debit |
61,520 | 81,943 | 88,574 | 88,594 | 92,713 | |||||||||||||||
| Goods and services |
-1,881 | 955 | -839 | -2,745 | -11,222 | |||||||||||||||
| Credit |
45,875 | 63,898 | 68,034 | 67,140 | 63,872 | |||||||||||||||
| Debit |
47,756 | 62,943 | 68,873 | 69,885 | 75,094 | |||||||||||||||
| Goods |
2,356 | 6,137 | 4,956 | 3,180 | -4,583 | |||||||||||||||
| Credit |
40,762 | 58,262 | 61,604 | 60,281 | 57,027 | |||||||||||||||
| Debit |
38,406 | 52,126 | 56,648 | 57,101 | 61,610 | |||||||||||||||
| Services |
-4,237 | -5,182 | -5,795 | -5,925 | -6,638 | |||||||||||||||
| Credit |
5,113 | 5,636 | 6,430 | 6,859 | 6,845 | |||||||||||||||
| Debit |
9,350 | 10,818 | 12,225 | 12,784 | 13,484 | |||||||||||||||
| Primary income |
-11,229 | -15,499 | -15,046 | -14,216 | -12,685 | |||||||||||||||
| Credit |
1,667 | 2,765 | 3,840 | 3,613 | 3,985 | |||||||||||||||
| Debit |
12,897 | 18,265 | 18,886 | 17,829 | 16,670 | |||||||||||||||
| Secondary income |
4,448 | 4,834 | 4,579 | 4,594 | 4,358 | |||||||||||||||
| Credit |
5,315 | 5,570 | 5,394 | 5,473 | 5,308 | |||||||||||||||
| Debit |
868 | 735 | 815 | 880 | 950 | |||||||||||||||
| Financial account |
-9,275 | -8,925 | -11,754 | -11,845 | -19,745 | |||||||||||||||
| Total Foreign Direct investment |
-1,920 | -12,318 | -21,335 | -15,534 | -24,012 | |||||||||||||||
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| Direct investment |
-947 | -6,228 | -15,646 | -8,557 | -12,358 | |||||||||||||||
| Net acquisition of financial assets |
5,483 | 8,420 | -606 | 7,652 | 3,899 | |||||||||||||||
| Equity and investment fund shares |
6,893 | 7,254 | -557 | 7,468 | 2,935 | |||||||||||||||
| Debt instruments |
-1,410 | 1,165 | -49 | 184 | 964 | |||||||||||||||
| Net incurrence of liabilities |
6,430 | 14,648 | 15,039 | 16,209 | 16,257 | |||||||||||||||
| Equity and investment fund shares |
7,065 | 12,776 | 13,800 | 13,840 | 13,764 | |||||||||||||||
| Debt instruments |
-635 | 1,872 | 1,239 | 2,368 | 2,493 | |||||||||||||||
| Portfolio investment |
-973 | -6,090 | -5,690 | -6,978 | -11,654 | |||||||||||||||
| Net acquisition of financial assets |
2,290 | 2,111 | 1,666 | 4,096 | 7,007 | |||||||||||||||
| Equity and investment fund shares |
— | — | — | — | — | |||||||||||||||
| Debt securities |
2,290 | 2,111 | 1,666 | 4,096 | 7,007 | |||||||||||||||
| Net incurrence of liabilities |
3,263 | 8,202 | 7,356 | 11,073 | 18,661 | |||||||||||||||
| Equity and investment fund shares |
1,318 | 2,288 | 3,180 | 1,926 | 3,833 | |||||||||||||||
| Debt securities |
1,944 | 5,914 | 4,176 | 9,147 | 14,828 | |||||||||||||||
| Financial derivatives (other than reserves) and employee stock options |
-354 | -82 | -714 | -33 | 268 | |||||||||||||||
| Net acquisition of financial assets |
-354 | -202 | -780 | -156 | -411 | |||||||||||||||
| Net incurrence of liabilities |
0 | -120 | -66 | -124 | -680 | |||||||||||||||
| Other investment |
-10,144 | -267 | 4,890 | -3,225 | -439 | |||||||||||||||
| Net acquisition of financial assets |
210 | 3,417 | 2,656 | 1,826 | 1,820 | |||||||||||||||
| Net incurrence of liabilities |
10,354 | 3,684 | -2,234 | 5,051 | 2,258 | |||||||||||||||
| Reserve assets |
3,142 | 3,742 | 5,406 | 6,946 | 4,437 | |||||||||||||||
| Net errors and omissions |
-613 | 785 | -448 | 522 | 196 | |||||||||||||||
| Memorandum financial account excluding reserve assets |
-12,418 | -12,668 | -17,160 | -18,792 | -24,182 |
| 1: | Data for 2014 and 2013 are preliminary and data for 2010, 2011 and 2012 are revised. |
| 2: | The calculation of the change in international reserves is made based on the 6th edition of the IMF Balance of Payments manual, following the recommendation not to include in this calculation changes due to exchange rate and price valuations. |
| 3: | Other financial corporations are institutional units that provide financial services, and which asset and liabilities are, in general, not available in open financial markets. |
| 4: | Non-financial corporations are corporations whose principal activity is the production of goods or non-financial market services. This category includes legally established companies, branches of non-resident corporations, quasi-corporations, hypothetical resident land owners units and resident non-profit institutions that are market producers of goods and nonfinancial services. |
| Source: | Banco de la República — Economic Studies. |
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Foreign Trade
Colombia’s trade has historically been, and continues to be, dominated by the export of raw materials and the import of intermediate and capital goods. Most consumer goods have traditionally been produced locally. Producers of these consumer goods had, until recent years, enjoyed the protection of high import tariffs and other trade barriers. Since the early 1990s, Colombia has reduced trade barriers, opening the economy to foreign competition. In 2010, imports (CIF) of consumer goods increased by 34.9% as compared to 2009, and in 2011 and 2012 imports (CIF) of consumer goods increased by 25.7% and 14.4%, respectively, as compared to the immediately preceding year. In 2013, imports (CIF) of consumer goods increased by 1.4% as compared to 2012 and by 8.6% in 2014 as compared to 2013.
Whereas tariffs used to be a means to raise tax revenues to remedy the growing fiscal deficit, tariffs are now regarded as a commercial policy instrument rather than a revenue source. In addition, changes to tariff rates have become less common due to Colombia’s participation in the Andean Community common external tariff agreement, which implemented common external tariffs in February 1995. See “—Geographic Distribution of Trade” for more information on the Andean Community.
Despite the free-trade policies adopted in recent years, the Government continues to recognize the special needs of some local producers. The program known as “Programa de Protección de Ingresos para Productores de Bienes Agrícolas Exportables” benefits producers of flowers and bananas, among other sectors. The program is expected to help the agricultural sector with a subsidy on the cost of exchange rate hedges, which initially will be at 60% and increase to 70% over the long term. In 2008, the Government announced the continuation of the program with Ps. 49 billion in funds allocated to protect the revenues of agricultural exporters. On February 15, 2008, Finagro, after it became the operator of the program, established the subsidy to be between 70% and 90% of the cost of the exchange rate hedge, depending on the duration of the transaction, as well as the maximum hedge amount by producer and the maximum subsidy limit. From 2002 to 2008, the Government spent Ps. 1.3 trillion for the measures that were taken in order to help alleviate the negative impact in peso appreciation. According to Finagro, as of December 31, 2014, Ps. 15.5 billion had been spent of the total amount of Ps. 15.9 billion allocated for 2014, which represented an execution of 98% of budgeted expenses for the program.
Colombia’s customs system, which is part of the Plan Vallejo (discussed further below under “—Exports”), is designed to foster investment in the export sector and includes the following features:
| • | Large exporters—those which exported over $2 million during the past 12 months and for which exports represented at least 60% of their operating income—may utilize simplified procedures for the import of raw materials and capital goods to be used in the production of exportable goods. |
| • | Special export programs grant customs and VAT exemptions for imports of raw materials, which are used to produce inputs and in turn used by other Colombian companies in the manufacture of goods to be exported. |
| • | New procedures permit the storage of foreign merchandise, free of import tariffs for a six-month period, so long as the merchandise is distributed abroad. |
Exports
Commodities, particularly coffee, petroleum and coal, traditionally have been Colombia’s most important exports. In 1995, coffee accounted for 18.0% of exports while oil and its derivatives accounted for 21.5% of total exports, and in 2014, coffee accounted for an estimated 4.5% of total exports while oil and its derivatives accounted for 53.1% of total exports. Historically, the value of coffee exports began to decline in 1987 and accelerated with the price drop that followed the collapse of the International Coffee Agreement in
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1989, an arrangement among coffee producing and consuming countries to stabilize coffee prices. Beginning in 1993, coffee exports recovered somewhat due to the effort led by Colombia to limit the world supply of coffee through an agreement with the World Association of Coffee Producing Countries, but coffee exports subsequently declined and are expected to remain a smaller portion of total exports than oil and its derivatives. Coffee exports have grown from $1,884 million in 2010 to $2,473 million in 2014 according to preliminary figures from Banco de la República. Nontraditional exports, which include products such as shrimp, bananas, flowers, emeralds and manufactured goods, have increased in recent years. Nontraditional exports, including emeralds, increased from $5,190 million in 1995 to $14,056 million in 2014 and accounted for 25.8% of exports in 2014. Industrial exports increased from $9,433 million in 2010 to $10,838 million in 2014. During 2014, chemicals, food, beverages and tobacco and textiles and apparel were the sectors with the greatest share of total exports from the industry group representing 6.7%, 3.6% and 2.7% of total exports, respectively. The weighted average price of coffee exported by Colombian producers in 2013 decreased by 38.8% to $0.91 per pound in 2014 from an average price of $1.48 per pound in 2013. The volume of coffee exports increased by 15.0% in 2014 as compared with the volume exported in 2013.
Since 2004, the Government has been pursuing steps to promote exports, including:
| • | the formation of regional foreign trade advisory committees, which coordinate the knowledge and expertise of both the private sector and the Government. They achieve this purpose by exchanging initiatives and information, drafting proposals for overall programs and strategies, and implementing trade-related actions. These committees promote industry in areas conducive to exports, such as municipalities with shipping ports; |
| • | the formation of free trade zones — special enclaves which offer exchange, tax, customs and trade incentives to increase and diversify the production of goods and services for overseas markets. Industrial free trade zones may be used for goods and services, tourism promotion and science parks; and |
| • | the creation of EXPOPYME — a program that supports small and medium-size companies and provides business advice for entrepreneurs seeking export opportunities. |
The Government currently assists exporters through the Plan Vallejo, also known as Special System of Imports and Exports, a Government program that started in 2002, under which producers of goods intended for overseas markets may obtain partial or total exemptions from customs duties and taxes on imported raw materials, capital goods, intermediate goods and spare parts, as long as they are incorporated into the goods or services to be exported. In 2008, the Government extended the benefits of Plan Vallejo by removing the duties on imports of machinery and equipment for 30 different categories of services. Services sectors such as tourism, software development, construction, communications, transport, among others, benefitted from the expansion of Plan Vallejo.
The following table shows the trends in the composition of Colombia’s exports for the years indicated, based on the export figures maintained by Banco de la República for balance of payments purposes.
Trends in the Composition of Exports
2000, 2005, 2010 and 2014(1)
| (millions of U.S. dollars and percentage of total exports) | ||||||||||||||||||||||||||||||||
| 2000 | 2005 | 2010 | 2014(2) | |||||||||||||||||||||||||||||
| Exports (FOB): |
||||||||||||||||||||||||||||||||
| Oil and its Derivatives |
$ | 4,776 | 36.4 | % | $ | 5,559 | 26.7 | % | $ | 16,499 | 41.8 | % | $ | 28,885 | 53.1 | % | ||||||||||||||||
| Coffee |
$ | 1,067 | 8.1 | % | $ | 1,471 | 7.1 | % | $ | 1,884 | 4.8 | % | $ | 2,473 | 4.5 | % | ||||||||||||||||
| Coal |
$ | 893 | 6.8 | % | $ | 2,598 | 12.5 | % | $ | 6,015 | 15.2 | % | $ | 6,810 | 12.5 | % | ||||||||||||||||
| Nickel and Gold |
$ | 302 | 2.3 | % | $ | 1,255 | 6.0 | % | $ | 3,062 | 7.8 | % | $ | 2,219 | 4.1 | % | ||||||||||||||||
| Nontraditional Exports (3) |
$ | 6,098 | 46.4 | % | $ | 9,935 | 47.7 | % | $ | 12,042 | 30.5 | % | $ | 14,056 | 25.8 | % | ||||||||||||||||
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| Total Exports |
$ | 13,136 | 100.0 | % | $ | 20,818 | 100.0 | % | $ | 39,502 | 100.0 | % | $ | 54,443 | 100.0 | % | ||||||||||||||||
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Totals may differ due to rounding.
| 1: | Figures are based on the recommendations contained in the sixth edition of the IMF´s Balance of Payments Manual. Does not incorporate special trade operations. Total Exports figures from BOP include commerce from Free Trade Zones not included in DANE´s Total Exports statistics. Figures from 2005 to 2014 are preliminary. |
| 2: | Preliminary. |
| 3: | Includes emeralds but does not include gold. |
| Source: | DANE and Banco de la República—Economic Studies. |
Exports of goods (according to balance of payments figures) decreased by 5.5% in 2014 compared to 2013 due to a decrease in international commodity prices, mainly oil prices, although this result was partially offset by the increase of volume of shipped raw materials such as coffee, flowers and bananas. Nontraditional exports including emeralds decreased by 6.8%, from $16,769 million in 2013 to $15,634 million in 2014. Among industry exports, the largest decreases among the categories of specifically identified export products were registered by other industries (including jewelry, musical instruments, sporting goods and other products), which decreased by 25.8%, iron and steel industries, which decreased by 12.1%, and paper and its byproducts, which decreased by 11.0%. Exports of goods (according to DANE and Banco de la República) in 2014 totaled approximately $54,443 million, including oil and its derivatives (53.1% of total exports), coal (12.5% of total exports), coffee (4.5% of total exports), nickel (1.2% of total exports) and nontraditional exports (28.7% of total exports).
According to preliminary figures supplied by DANE and the Dirección de Impuestos y Aduanas Nacionales de Colombia (“DIAN”), exports of goods totaled $9,416 million during the first quarter of 2015, representing a 30.2% decrease as compared to the same period in 2014. During the same period, traditional exports decreased by 36.9%. This decrease in traditional exports was primarily caused by the decrease in exports of oil and its derivatives. Nontraditional exports decreased by 13.1% mainly due to a decrease in the sales of non-monetary gold and a decrease in manufacturing sector. The following tables show the composition of Colombia’s exports and the volume and price of Colombia’s leading exports for the years indicated.
Exports (FOB) by Group of Products
(millions of U.S. dollars)
| 2010(1) | 2011(1) | 2012(1) | 2013(1) | 2014(1) | % of total 2014(1) |
|||||||||||||||||||
| Mining |
||||||||||||||||||||||||
| Oil and its Derivatives |
$ | 16,499 | $ | 28,421 | $ | 31,497 | $ | 32,011 | $ | 28,885 | 53.1 | % | ||||||||||||
| Coal |
6,015 | 8,397 | 7,805 | 6,688 | 6,810 | 12.5 | % | |||||||||||||||||
| Emeralds |
109 | 129 | 117 | 123 | 137 | 0.3 | % | |||||||||||||||||
| Nickel |
967 | 827 | 881 | 680 | 641 | 1.2 | % | |||||||||||||||||
| Gold(2) |
2,095 | 2,769 | 3,382 | 2,223 | 1,578 | 2.9 | % | |||||||||||||||||
| Others(3) |
233 | 318 | 302 | 293 | 349 | 0.6 | % | |||||||||||||||||
| $ | 25,919 | $ | 40,861 | $ | 43,984 | $ | 42,017 | $ | 38,400 | 70.5 | % | |||||||||||||
| Agriculture, Livestock, Forestry and Fishing, except Coffee |
2,266 | 2,415 | 2,790 | 2,981 | 2,732 | 5.0 | % | |||||||||||||||||
| Coffee |
1,884 | 2,608 | 1,910 | 1,884 | 2,473 | 4.5 | % | |||||||||||||||||
| Industry |
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| 2010(1) | 2011(1) | 2012(1) | 2013(1) | 2014(1) | % of total 2014(1) |
|||||||||||||||||||
| Food, Beverages and Tobacco |
1,482 | 1,900 | 1,787 | 1,607 | 1,935 | 3.6 | % | |||||||||||||||||
| Textiles and Apparel(4) |
1,574 | 1,752 | 1,744 | 1,579 | 1,490 | 2.7 | % | |||||||||||||||||
| Wood and its Derivatives |
78 | 74 | 89 | 85 | 93 | 0.2 | % | |||||||||||||||||
| Paper and its Byproducts |
661 | 727 | 544 | 487 | 433 | 0.8 | % | |||||||||||||||||
| Chemicals |
2,862 | 3,355 | 3,451 | 3,715 | 3,659 | 6.7 | % | |||||||||||||||||
| Nonmetalic Minerals |
399 | 448 | 490 | 409 | 429 | 0.8 | % | |||||||||||||||||
| Iron and Steel Industries |
1,010 | 1,044 | 1,082 | 1,014 | 892 | 1.6 | % | |||||||||||||||||
| Machinery and Equipment |
694 | 777 | 890 | 912 | 912 | 1.7 | % | |||||||||||||||||
| Other Industries(5) |
674 | 705 | 1,061 | 1,340 | 994 | 1.8 | % | |||||||||||||||||
| Total |
9,433 | 10,782 | 11,139 | 11,149 | 10,838 | 19.9 | % | |||||||||||||||||
| Total Exports |
$ | 39,502 | $ | 56,666 | $ | 59,823 | $ | 58,031 | $ | 54,443 | 100.0 | % | ||||||||||||
Totals may differ due to rounding.
| 1: | Preliminary. |
| 2: | Since 1980 to 1993 includes domestic purchase of gold by Banco de la República. The gold figures in this table represent the amount of gold transactions officially registered with Banco de la República. |
| 3: | Includes salt, clay and sand mining and manufacture of fertilizers, chemicals and other products. |
| 4: | Includes leather, leather products and plastic. |
| 5: | Includes jewelry, musical instruments, sporting goods and other products. |
| Source: | DANE and Banco de la República. Figures are based on the recommendations contained in the sixth edition of the IMF´s Balance of Payments Manual. Does not incorporate special trade operations. Total Exports figures included under the Balance of Payments table above include commerce from Free Trade Zones that not included in DANE´s Total Exports statistics. |
Volume and Price of Leading Exports
| 2010(1) | 2011(1) | 2012(1) | 2013(1) | 2014(1) | ||||||||||||||||
| Crude Oil Export Volume (thousands of barrels/day) |
508 | 654 | 702 | 753 | 770 | |||||||||||||||
| Crude Oil Price ($/barrel) |
73.1 | 99.3 | 104.2 | 100.3 | 98.3 | |||||||||||||||
| Coffee Export Volume (millions of 60 kg. bags) |
6.8 | 7.2 | 6.6 | 9.0 | 10.4 | |||||||||||||||
| Coffee Price ($/lb, ex dock) |
2.10 | 2.84 | 2.03 | 1.48 | 0.91 | |||||||||||||||
| 1: | Preliminary. |
| Source: | Banco de la República. |
In 2014, the total volume of crude oil exported increased by 2.3%, and the average price of crude oil exported by Colombia decreased by 1.9% from $100.3 per barrel in 2013 to $98.3 per barrel in 2014. The weighted average price of coffee exported by Colombian producers decreased to $0.91 per pound in 2014, representing a decrease of 38.8% from the average price of $1.48 per pound in 2013. The volume of coffee exports increased by 15.0% in 2014 as compared with the volume exported in 2013.
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Imports
Imports (CIF) totaled $40.5 billion in 2010. Imports (CIF) increased by 34.0% in 2011, 9.0% in 2012 and 0.5% in 2013. In 2014, imports (CIF) increased by 7.8% as compared to 2013. Comparing 2013 figures with 2014 figures, imports of consumer goods increased by 8.6%, imports of raw materials and intermediate goods increased by 8.9% and imports of capital goods increased by 6.0%. In 2014, consumer goods comprised 22.1% of total imports, raw materials and intermediate goods accounted for 43.2% of total imports and capital goods comprised 34.6% of total imports.
According to preliminary figures supplied by DANE and DIAN, imports of goods totaled $14,113 million during the first quarter of 2015, representing a 4.4% decrease as compared to the same period in 2014. This decrease was primarily due to a decrease in imports of raw materials and intermediate products by 15.5%.
The following table shows the composition of Colombia’s major imports for the last five years.
Imports (CIF)
| 2010(1) | 2011(1) | 2012(1) | 2013(1) | 2014(1) | % of total 2014(1) |
|||||||||||||||||||
| (millions of U.S. dollars) | ||||||||||||||||||||||||
| Consumer Goods |
9,004 | 11,315 | 12,941 | 13,122 | 14,251 | 22.1 | % | |||||||||||||||||
| Non-Durable |
3,960 | 5,152 | 6,282 | 6,422 | 6,793 | 10.8 | % | |||||||||||||||||
| Durable |
5,044 | 6,164 | 6,659 | 6,701 | 7,457 | 11.3 | % | |||||||||||||||||
| Automobiles |
2,488 | 3,337 | 3,512 | 3,552 | 3,896 | 6.0 | % | |||||||||||||||||
| Arms and Military Equipment |
245 | 93 | 71 | 73 | 232 | 0 | % | |||||||||||||||||
| Others |
2,311 | 2,733 | 3,075 | 3,076 | 3,329 | 5.2 | % | |||||||||||||||||
| Raw Materials and Intermediate Goods |
17,133 | 22,609 | 25,552 | 25,670 | 27,953 | 43.2 | % | |||||||||||||||||
| Fuels(2) |
2,070 | 3,844 | 5,732 | 6,375 | 7,544 | 10.7 | % | |||||||||||||||||
| Electric |
0 | 0 | 0 | 1 | 2 | 0.0 | % | |||||||||||||||||
| Agricultural |
1,391 | 1,845 | 2,030 | 1,991 | 2,061 | 3.4 | % | |||||||||||||||||
| Industrial |
13,671 | 16,920 | 17,790 | 17,303 | 18,346 | 29.1 | % | |||||||||||||||||
| Industrial, Chemical and Pharmaceutical Products |
5,786 | 7,073 | 7,549 | 7,816 | 8,109 | 13.2 | % | |||||||||||||||||
| Mineral Products |
3,851 | 4,714 | 4,900 | 4,507 | 5,122 | 7.6 | % | |||||||||||||||||
| Non-Food Agricultural Products |
1,981 | 2,428 | 2,415 | 2,376 | 2,561 | 4.0 | % | |||||||||||||||||
| Food Products |
2,054 | 2,706 | 2,926 | 2,602 | 2,553 | 4.4 | % | |||||||||||||||||
| Capital Goods |
14,324 | 20,280 | 20,591 | 20,567 | 21,800 | 34.6 | % | |||||||||||||||||
| Construction Materials |
1,152 | 1,898 | 1,959 | 1,919 | 1,981 | 3.2 | % | |||||||||||||||||
| Agricultural |
110 | 174 | 176 | 172 | 176 | 0.3 | % | |||||||||||||||||
| Transportation |
4,733 | 7,713 | 6,684 | 6,345 | 6,777 | 10.7 | % | |||||||||||||||||
| Industrial |
8,329 | 10,495 | 11,772 | 12,132 | 12,866 | 20.4 | % | |||||||||||||||||
| Industrial Machinery |
3,376 | 4,380 | 4,855 | 4,526 | 4,431 | 7.6 | % | |||||||||||||||||
| Office and Technical Machinery |
2,251 | 2,653 | 3,054 | 3,323 | 3,607 | 5.6 | % | |||||||||||||||||
| Others |
2,702 | 3,462 | 3,864 | 4,283 | 4,828 | 7.2 | % | |||||||||||||||||
| Unclassified |
25 | 28 | 27 | 22 | 23 | 0.0 | % | |||||||||||||||||
| Total |
40,486 | 54,233 | 59,111 | 59,381 | 64,029 | 100.0 | % | |||||||||||||||||
Totals may differ due to rounding.
| 1: | Preliminary. |
| 2: | Includes oil derivatives and coal. |
| Sources: | DANE and Dirección de Impuestos y Aduanas Nacionales (National Directorate of Customs and Taxes). |
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Geographic Distribution of Trade
The following tables show the destination and origin, respectively, of Colombia’s exports and imports.
Merchandise Exports to Major Trading Partners
| 2010(1) | 2011(1) | 2012(1) | 2013(1) | 2014(1) | ||||||||||||||||
| (percentage of total exports) | ||||||||||||||||||||
| United States |
42.2 | 38.6 | 36.3 | 31.4 | 25.7 | |||||||||||||||
| China |
4.4 | 3.5 | 5.6 | 8.7 | 10.5 | |||||||||||||||
| Panama |
2.4 | 3.8 | 4.8 | 5.5 | 6.6 | |||||||||||||||
| Spain |
1.4 | 3.0 | 4.9 | 4.9 | 6.0 | |||||||||||||||
| India |
1.3 | 1.3 | 2.3 | 5.1 | 5.0 | |||||||||||||||
| Netherlands |
4.2 | 4.4 | 4.2 | 3.9 | 3.9 | |||||||||||||||
| Venezuela |
3.6 | 3.0 | 4.3 | 3.8 | 3.6 | |||||||||||||||
| Ecuador |
4.6 | 3.4 | 3.2 | 3.4 | 3.4 | |||||||||||||||
| Brazil |
2.5 | 2.3 | 2.1 | 2.7 | 3.0 | |||||||||||||||
| Peru |
2.9 | 2.3 | 2.6 | 2.2 | 2.2 | |||||||||||||||
| United Kingdom |
1.7 | 2.1 | 1.9 | 1.9 | 2.0 | |||||||||||||||
| Chile |
2.7 | 3.9 | 3.6 | 2.7 | 1.8 | |||||||||||||||
| Switzerland |
2.2 | 1.7 | 1.2 | 0.8 | 0.9 | |||||||||||||||
| Others |
24.1 | 26.7 | 23.0 | 23.2 | 25.4 | |||||||||||||||
| Total |
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||
Totals may differ due to rounding.
| 1: | Preliminary. |
| Sources: | DANE. |
Merchandise Imports by Major Trading Partners
| 2010(1) | 2011(1) | 2012(1) | 2013(1) | 2014(1) | ||||||||||||||||
| (percentage of total exports) | ||||||||||||||||||||
| United States |
36.5 | 35.6 | 33.1 | 34.7 | 34.2 | |||||||||||||||
| China |
5.0 | 5.5 | 6.0 | 6.0 | 6.6 | |||||||||||||||
| Mexico |
5.5 | 7.5 | 8.0 | 5.9 | 5.5 | |||||||||||||||
| Panama |
4.0 | 5.3 | 5.8 | 5.6 | 4.9 | |||||||||||||||
| Switzerland |
3.4 | 3.4 | 3.7 | 3.6 | 3.6 | |||||||||||||||
| South Korea |
3.3 | 3.3 | 3.1 | 3.3 | 3.6 | |||||||||||||||
| Germany |
3.5 | 3.4 | 3.3 | 3.5 | 3.1 | |||||||||||||||
| Brazil |
3.8 | 3.2 | 3.1 | 2.8 | 3.0 | |||||||||||||||
| Chile |
2.3 | 2.1 | 2.4 | 2.3 | 2.3 | |||||||||||||||
| Japan |
3.4 | 2.8 | 2.6 | 1.9 | 2.1 | |||||||||||||||
| Spain |
1.5 | 1.5 | 1.9 | 2.0 | 1.9 | |||||||||||||||
| Uruguay |
1.9 | 1.8 | 1.5 | 1.4 | 1.9 | |||||||||||||||
| Ecuador |
1.7 | 1.5 | 1.6 | 1.4 | 1.5 | |||||||||||||||
| Others |
24.2 | 23.0 | 23.9 | 25.6 | 25.6 | |||||||||||||||
| Total |
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||
Totals may differ due to rounding.
| 1: | Preliminary. |
| Sources: | National Directorate of Customs and Taxes. |
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The United States is Colombia’s most important trading partner. During 2014, trade between the two countries accounted for approximately 25.7% of Colombia’s total exports and 34.2% of total imports. The major trading partners of Colombia classified by exports are the United States, China and the European Union. The major trading partners of Colombia classified by imports are the United States, Mexico and China.
Exports to the United States were $16.8 billion in 2010, $22.0 billion in 2011, $21.8 billion in 2012, $18.5 billion in 2013, $14.1 billion in 2014 and $5.1 billion for the period from January to June 2015. In 2014, exports to the United States decreased by 23.6%, mainly due to lower sales of refined petroleum products and mineral products, which decreased by 31.6% compared to 2013. Imports from the United States were $10.4 billion in 2010, $13.5 billion 2011, $14.2 billion in 2012, $16.3 billion in 2013, $18.2 billion in 2014 and $8.1 billion for the period from January to June of 2015. In 2014, imports from the United States increased by 11.4%, mainly as a result of a 33.2% increase in imports of oil, minerals, refined petroleum products and related products.
Exports to China were $1.8 billion in 2010, US$2.0 billion 2011, $3.3 billion in 2012, $5.1 billion in 2013 and $5.6 billion in 2014. For the period from January to June 2015 exports to China totaled $952 million. In 2014, exports to China increased 12.8% over the previous year, mainly due to a 167.1% increase in the export of wood, charcoal and wood products. Imports from China were $5.5 billion in 2010, $8.2 billion in 2011, $9.8 billion in 2012, $10.4 billion in 2013 and $11.8 billion in 2014, from January to June of 2015 imports totaled $4.9 billion. In 2014, imports from China increased by 13.8%, mainly as a result of a 16.2% increase in imports of equipment, electrical recording materials and image materials.
Exports to the European Union were $5.0 billion in 2010, $8.9 billion in 2011, $9.1 billion in 2012, $9.3 billion in 2013 and $9.4 billion in 2014. For the period from January to June 2015, exports totaled $3.2 billion. In 2014, exports to the European Union increased 1.3% over the previous year, mainly due to a 45.2% increase in exports of coffee, tea, mate and spices.
Imports from Mexico were $3.9 billion in 2010, $6.1 billion in 2011, $6.5 billion in 2012, $5.5 billion in 2013, $5.3 billion in 2014 and $1.9 billion for the period from January to June 2015. In 2014, imports from Mexico decreased by 4.1%.
In October 2002, Colombia became eligible to participate in the ATPDEA, which President Bush signed in August 2002 and which expired on February 12, 2011. On February 12, 2011, the privileges under the ATPDEA lapsed but were reauthorized, retroactively, on October 21, 2011 for eligible countries, such as Colombia and Ecuador. Colombia is no longer an eligible beneficiary country under the ATPDEA as of May 15, 2012, when the United States-Colombia free trade agreement entered into force. The ATPDEA expired on July 31, 2013.The ATPDEA extended the unilateral tariff preferences on certain goods accorded to the Andean countries through the Andean Trade Preference Act to certain new products, such as apparel made with regional fabrics, footwear, leather goods, petroleum and watches.
In March 2011, Bancoldex opened a new credit line of $30 million for Colombian exporters who used to be covered under ATPDEA for the purpose of financing those exporters’ tariffs. This line of credit was in addition to the $150 million credit line offered on February 17, 2011. To facilitate access to the credit line, small to medium enterprises would have the benefit of a guaranty by the FNG.
On November 22, 2006, the United States and Colombia signed a free trade agreement that had been under discussion since the middle of 2004. The benefits of the free trade agreement are intended to extend and expand the benefits received under ATPDEA, which originally had been set to expire by the end of 2006. On June 14, 2007, the Colombian Congress approved the Free Trade Agreement. Following the approval from Congress, on July 4, 2007, the President signed the law authorizing the Free Trade Agreement and on July 24, 2008 the Constitutional Court declared the agreement compatible with the Constitution. The Congress of the United States approved the free trade agreement between Colombia and the United States on October 12, 2011, and President Obama signed the agreement into law on October 21, 2011. The implementation phase in Colombia was intended to verify that the agreement is consistent with Colombia’s legal system. Thereafter, the two governments exchanged diplomatic notes at the Summit of the Americas in Cartagena, and the free trade agreement entered into force on May 15, 2012.
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From 2008 to 2009, Venezuela was the second most significant destination for Colombian exports. In 2014, however, Venezuela accounted for only 3.6% of Colombia’s total exports, falling behind China (10.5%), Panama (6.6%), Spain (6.0%), India (5.0%) and Netherlands (3.9%). Venezuela is not a significant source of imports into Colombia.
Colombia has pursued a policy of reducing trade barriers by fostering economic integration with other countries and promoting bilateral and multilateral trade agreements with regional trading partners. The Andean Community of Nations (Comunidad Andina de Naciones), which originally included Bolivia, Ecuador, Venezuela, Colombia and Peru, was part of this effort to increase trade among member countries. Pursuant to this agreement, originally ratified in May 1969, the member nations implemented common external tariffs on February 1, 1995. On April 22, 2006, Venezuela announced its intention to withdraw from the Andean Community. As of November 2007, the Ministry of Foreign Affairs of Venezuela stated that any intention to rejoin the organization had been officially suspended. The Cartagena Agreement, under which the Andean Community was created, provides, however, that a member country that withdraws from the community must maintain the agreed tariff program of the existing free trade zone among community members for at least five years.
On April 9, 2011, in the context of the withdrawal of Venezuela from the Andean Community effective April 21, 2011, the presidents of Colombia and Venezuela agreed to maintain the status quo regarding tariffs and free trade under the Andean Community for an additional three months beginning on April 21, 2011 with an option to renew the agreement for another three-month period thereafter until the negotiation teams of both countries conclude a new trade agreement.
On July 23, 2011, the Ministry of Commerce, Industry and Tourism announced that the Venezuelan government had extended until October 22, 2011 the effect of Venezuelan Decree 8,160 of April 18, 2011 which grants tariff exemptions provided under the Andean Community of Nations Agreement. On October 24, 2011, after finishing the bilateral commission meetings, the governments of Colombia and Venezuela signed an agreement to continue the tariff exemptions provided under the Andean Community of Nations Agreement until January 22, 2012. On November 28, 2011, Colombia and Venezuela signed a Partial Scope Agreement that will support and regulate the trade between the countries within the framework of the Asociación Latinoamericana de Integración, or ALADI, an association of 13 member countries (Argentina, Bolivia, Brazil, Chile, Colombia, Cuba, Ecuador, Mexico, Panama, Paraguay, Peru, Uruguay and Venezuela) that seeks to establish a common market in the region.
On April 5, 2004, the Andean Community concluded a free trade agreement with Mercosur, the free trade association composed of Argentina, Brazil, Paraguay and Uruguay. This agreement, which became effective in July 2004, created a South American free trade area composed of 300 million inhabitants. On September 20, 2006, Chile was accepted as an associated member country of the Andean Community.
In 2014, bilateral trade between Colombia and the other countries of the Andean Community increased compared to 2013. Exports to the Andean Community decreased by 5.4% from $3,392 million in 2013 to $3,210 million in 2014. Imports from the Andean Community increased by 16.3% from $2,300 million in 2013 to $2,675 million in 2014.
Colombia entered into a free trade agreement, known as the G-3 Agreement, with Mexico and Venezuela, which became effective on January 1, 1995. In May 2006, the Venezuelan government formally announced its withdrawal from the G-3 Agreement.
On July 28, 2009, as a result of allegations made by President Uribe of an alleged weapons delivery from the Venezuelan Army to the FARC, President of Venezuela Hugo Chávez announced the suspension of diplomatic relations with Colombia, the withdrawal of Venezuela’s ambassador from Colombia and the review of all economic agreements between both nations. On August 8, 2009, President Chávez ordered the return of Venezuela’s top diplomat to Colombia but expressed disagreement over President Uribe’s decision to permit U.S. military personnel to use military bases in Colombia. In 2009, due to the commercial
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restrictions imposed by the Venezuelan government, Colombian exports to Venezuela decreased by 33.5% from $6,092 million in 2008 to $4,050 million in 2009. The effect of the decrease in exports to Venezuela is estimated at 1% of GDP for 2009. This led to an even further decrease of Colombian exports to Venezuela in 2010, of 64.9% to $1,423 million.
On July 22, 2010, the Colombian permanent representative to the OAS alleged before the OAS permanent council that illegal armed groups from Colombia were present in Venezuelan territory. The allegation was rejected by the Venezuelan permanent representative and a disruption in the diplomatic relations with Colombia was declared by Venezuela.
On August 10, 2010, after a meeting held in Santa Marta, Colombia, President Santos and President Chavez announced the reestablishment of diplomatic and commercial relations between the two countries. In a joint declaration, the presidents announced the creation of five bilateral commissions for the review of the following issues: trade and debt of Venezuela with Colombian exporters; economic cooperation; social investment in their frontiers; joint infrastructure development; and security.
In 2005, the European Union and the Andean Community announced their intention to begin negotiations in 2006 for a free trade agreement. Following the announcement by Venezuela of its intention to withdraw from the Andean Community, the start of the negotiations was postponed to 2007. Negotiations between the European Union and the Andean Community began in September 2007; however, in 2008, Peru expressed its desire to separately negotiate a free trade agreement with the European Union due to economic tensions with Bolivia and Ecuador. That circumstance created an environment of uncertainty and hampered the progress of negotiations among the Andean countries and the European Union. In May 2010, Colombia and Peru made official statements announcing the success of negotiations regarding the establishment of a free trade agreement with the European Union. On June 26, 2012, the European Commission signed the free trade agreement among Colombia, Peru and the European Union. The European Parliament approved the agreement in December 2012 and Colombia completed its internal ratification procedures in June 2013, clearing the way for provisional application of the agreement on August 1, 2013. The agreement is currently in force.
The members states of the European Free Trade Association, Iceland, Liechtenstein, Norway and Switzerland, signed a free trade agreement with Colombia on November 25, 2008, which was approved by law on January 2010. Colombia, Liechtenstein and Switzerland ratified the agreement in 2009. Norway and Iceland ratified it in 2014 and the agreement entered into force in September and October 2014, respectively. The agreement contemplates the liberalization of trade in agricultural and industrial goods, rules of origin, customs procedures and trade facilitation. It also includes commitments regarding trade in services, the transit of persons, e-commerce, technical standardization, investment measures, competition policy and intellectual property.
As of June 2013, Mercosur, and the European Union have conducted nine rounds of negotiations for a free trade agreement focused on trade rules other than direct market access issues. At the European Union-Mercosur trade ministerial meeting held in Santiago, Chile on January 26, 2013, the European Union and Mercosur agreed to exchange offers on customs duties and quotas not later than in the last quarter of 2013. Colombia also is working to consolidate its relations with the members of the Asia-Pacific Economic Cooperation (APEC) forum on topics such as trade, tourism, economic cooperation and investment. In order to foster closer ties with China and Chinese businesses, Colombia hosted the Third Latin America and China Meeting in November 2009. In February 2012, Colombia attended the APEC Forum in Moscow. On May 22, 2013, President Santos signed the Framework Agreement of the Pacific Alliance that will provide Colombia with greater access in areas such as free movement of goods, services, capital and people with the other members of the Pacific Alliance, which includes Chile, Mexico and Peru. On May 23, 2013, President Santos met with the presidents of Chile, Mexico and Peru in the VIIth Presidential Summit of the Pacific Alliance in Cali, Colombia to discuss strategy to generate new business opportunities and to continue with the economic and commercial integration among the Pacific Alliance countries.
On May 23, 2011, Colombia signed a free trade agreement with Switzerland with the aim of increasing trade in fruits, manufactured goods, and chemical products, among others, between the two countries. Between May 30, 2011 and June 3, 2011, Colombia held the first bilateral meeting with Turkey in
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Bogotá to continue negotiations on a free trade agreement, a draft of which was agreed on March 15, 2011. Currently both countries have met six times, and most of the chapters of the agreement have been negotiated. The most recent meeting was held in Ankara between May 31 and June 2, 2012. Colombia also seeks to negotiate a free trade agreement with Japan. The most recent meetings between the countries were held between May 12, 2014 and May 16, 2014 in Tokyo, Japan.
In 2013, Colombia signed free trade agreements with South Korea, Costa Rica, Panama and Israel. The Colombian Congress ratified the free trade agreement with South Korea in December 2014, making it the first free trade agreement with a country in Asia and thus opening a commercial door to the Asia-Pacific region.
Foreign Investment
Foreign investment in Colombia was traditionally directed towards the oil and mining sectors. Previously, investment in sectors such as public services was prohibited, and investments in the financial sector were limited to no more than 49% foreign ownership of financial institutions. As part of the Apertura process, the Gaviria administration (1990-1994) enacted reforms designed to make foreign investment in Colombia more attractive. For example, legislation was enacted that ensured equal treatment of foreign and local investors and foreign access to traditionally restricted economic sectors.
Under current law and regulations, foreign investments generally do not require prior governmental authorization. Foreign entities, however, must register investments with Banco de la República in order to establish their right to transfer profits and capital investments abroad. Investment in certain sectors, including financial services, still requires prior authorization. Foreign investment in national security and defense-related industries, as well as industries which process toxic and radioactive materials, is prohibited.
The Pastrana administration removed many of the remaining restrictions on foreign investment in order to stimulate economic growth and reduce unemployment. In June 1999, Congress approved a constitutional amendment to guarantee adequate compensation for expropriation of property.
Moreover, Decree 241 of 1999 removed restrictions on foreign investments in Colombian real estate, one of the few sectors of the economy in which foreign investment had been banned by the International Investment Statute. The public sector restructuring decrees of June 1999 also allowed public entities to sign contracts of “juridical stability” to protect private investors from sudden changes in legislation (including tax rules). Ecopetrol S.A. has made changes to the standard terms of its association contracts that are designed to encourage foreign investment in the oil sector. For a more detailed discussion of Ecopetrol S.A.’s association contracts, see “Economy—Principal Sectors of the Economy—Mining and Petroleum.” Law 756 of 2002 created an oil royalties system geared towards encouraging oil exploration on small and medium-size fields, which establishes variable royalties ranging from 8% for fields producing up to 5,000 barrels per day to 25% for fields producing in excess of 600,000 barrels per day. Law 963 of 2005, or Ley del Inversionista, established “juridical stability” protections under which foreign and local investors whose investments are greater than or equal to 7,500 times the monthly minimum wage are protected. As of July 24, 2015, the Government has signed 71 of these contracts.
In 2010, net foreign direct investment registered a net inflow of $947 million, a decrease of $3,583 million compared to 2009, and net portfolio investment had an inflow of $973 million. In 2011, net foreign direct investment was $5,281 million higher than in 2010, totaling a net inflow of $6,228 million and net portfolio investment had an inflow of $6,090 million. In 2012, net foreign direct investment totaled a net inflow of $15,646 million, an increase of $9,418 million from the value recorded in 2011 and net portfolio investment was $5,690 million, a decrease of $401 million from the amount recorded in 2011. In 2013, net foreign direct investment totaled a net inflow of $8,557 million, a decrease of $7,089 million from the value recorded in 2012 and net portfolio investment was $6,978 million in 2013.
According to preliminary data from Banco de la República, during 2014, net foreign direct investment was $12,358 million, or $3,801 million higher than in 2013, and net portfolio investment had an inflow of $11,654 million, or $4,676 million higher than in 2013. The increase in net foreign direct investment during 2014 was mainly due to a decrease in foreign capital outflows.
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The following table sets forth information on net foreign direct investment by country of origin for the years indicated.
Net Foreign Direct Investment by Country of Origin(1)
| 2010(2) | 2011(2) | 2012(2) | 2013(2) | 2014(2) | ||||||||||||||||
| (millions of U.S. dollars) | ||||||||||||||||||||
| North America |
||||||||||||||||||||
| United States |
1,593 | 2,155 | 2,476 | 2,840 | 2,284 | |||||||||||||||
| Mexico |
-296 | 455 | 849 | 556 | 578 | |||||||||||||||
| Canada |
268 | 273 | 291 | 258 | 444 | |||||||||||||||
| 1,564 | 2,884 | 3,616 | 3,654 | 3,306 | ||||||||||||||||
| South America |
||||||||||||||||||||
| Andean Group |
63 | 133 | 211 | 135 | 314 | |||||||||||||||
| Others |
266 | 1,021 | 3,782 | 767 | 635 | |||||||||||||||
| 328 | 1,154 | 3,993 | 902 | 949 | ||||||||||||||||
| Central America |
||||||||||||||||||||
| Panama |
1,368 | 3,508 | 2,395 | 2,039 | 2,428 | |||||||||||||||
| Central American Common Market(3) |
12 | 11 | 23 | 14 | 65 | |||||||||||||||
| 1,379 | 3,520 | 2,419 | 2,054 | 2,493 | ||||||||||||||||
| Caribbean |
1,627 | 2,151 | 2,359 | 3,238 | 2,093 | |||||||||||||||
| Europe |
||||||||||||||||||||
| EEC Countries |
271 | 2,618 | -50 | 2,528 | 3,279 | |||||||||||||||
| European Free Trade Association |
198 | 1,008 | 715 | 2,113 | 2,858 | |||||||||||||||
| Other Countries |
1,012 | 1,201 | 1,758 | 1,456 | 1,167 | |||||||||||||||
| 1,481 | 4,827 | 2,423 | 6,097 | 7,303 | ||||||||||||||||
| Asia |
36 | 92 | 147 | 108 | 110 | |||||||||||||||
| Other Countries |
13 | 21 | 83 | 156 | 2 | |||||||||||||||
| Portfolio Investment(4) |
2,349 | 2,899 | 3,626 | 4,784 | 12,658 | |||||||||||||||
| TOTAL |
8,779 | 17,547 | 18,666 | 20,993 | 28,915 | |||||||||||||||
Totals may differ due to rounding.
| 1: | Figures from balance of payments. Figures reflect foreign investment into Colombia and outflows of foreign direct investment, but do not reflect investment by Colombians abroad. |
| 2: | Preliminary. |
| 3: | Excluding Panama. |
| 4: | Figures reflect only short-term portfolio investment inflows. |
| Source: | Banco de la República. |
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The following table sets forth information on net foreign direct investment by sector for the years indicated.
Net Foreign Direct Investment by Sector(1)
| 2010 (2) | 2011 (2) | 2012 (2) | 2013(2) | 2014(2) | ||||||||||||||||
| (millions of U.S. dollars) | ||||||||||||||||||||
| Direct investment(3) (4) |
6,430 | 14,648 | 15,039 | 16,209 | 16,257 | |||||||||||||||
| Petroleum |
3,080 | 4,700 | 5,471 | 5,112 | 4,837 | |||||||||||||||
| Agriculture and Fishing |
58 | 156 | 26 | 296 | 203 | |||||||||||||||
| Mining |
1,838 | 2,480 | 2,474 | 2,977 | 1,582 | |||||||||||||||
| Manufacturing |
210 | 1,214 | 1,985 | 2,481 | 2,837 | |||||||||||||||
| Public Services |
43 | 381 | 672 | 314 | 523 | |||||||||||||||
| Construction |
302 | 444 | 401 | 354 | 669 | |||||||||||||||
| Commerce |
221 | 2,546 | 1,339 | 1,361 | 1,122 | |||||||||||||||
| Transportation and Communications |
-356 | 1,760 | 1,245 | 1,386 | 1,820 | |||||||||||||||
| Finance |
916 | 1,160 | 1,077 | 1,606 | 2,478 | |||||||||||||||
| Social Services |
118 | -193 | 349 | 324 | 185 | |||||||||||||||
| Portfolio investment(5) |
2,349 | 2,899 | 3,626 | 4,784 | 12,658 | |||||||||||||||
| Total |
8,779 | 17,547 | 18,666 | 20,993 | 28,915 | |||||||||||||||
Totals may differ due to rounding.
| 1: | Figures from balance of payments. |
| 2: | Preliminary. |
| 3: | Includes reinvested earnings. |
| 4: | Figures from balance of payments. Figures reflect foreign investment into Colombia and outflows of foreign direct investment, but do not reflect investment by colombians abroad. |
| 5: | Figures reflect only short-term portfolio investment inflows. |
| Source: | Banco de la República. |
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MONETARY SYSTEM
Banco de la República
Banco de la República, Colombia’s central bank, was chartered in 1923. Following ratification of the 1991 Constitution, Banco de la República was granted greater independence from the Government in its administration and in the formulation of monetary policy. The 1991 Constitution charges Banco de la República with the primary mission of controlling inflation, as measured by changes in the consumer price index, in addition to other central banking functions.
Banco de la República’s board of directors is responsible for setting monetary and exchange rate policy. The board of directors has seven members, five of whom are appointed by the President to four-year terms. At the end of each four-year term, the President may replace up to two of the five presidential appointees and must re-appoint the remaining three appointees. The Minister of Finance and Public Credit is the sixth board member and is the sole representative of the Government on the board of directors. The seventh member is elected by the other six members and serves as the Governor of Banco de la República. Unless all seven members of the board of directors vote to do so, Banco de la República may not finance the Government’s budget deficits. The Constitution prohibits Banco de la República from making loans to the private sector except to provide liquidity to the financial system or to arrange and intermediate non-peso denominated loans in the local market for specific limited purposes.
Banco de la República is authorized by law, subject to certain restrictions, to regulate interest rates payable on time deposits, establish minimum reserve requirements for credit institutions and provide discount facilities for certain types of bank loans. In addition, Banco de la República performs other traditional functions of a central bank, including managing the country’s international reserves and acting as lender of last resort to the financial system. The Government is responsible for any losses and entitled to any profits generated from the operations of Banco de la República. Banco de la República registered an operating loss of Ps. 1,166.2 billion in 2014 which is Ps. 542.1 billion less than the loss registered in 2013. The bank, after many years of generating profits, started generating losses in 2010. This change is explained by the lower external interest rates and, during 2014, the decrease in the international price of oil and the depreciation of the currency against the U.S. dollar, which have significantly reduced income from international reserves. Additionally, during recent years, Banco de la Republica has substantially decreased purchasing currencies in the foreign exchange market, doing so only to maintain the exchange rate and to stabilize the trade balance.
Financial Sector
As of December 31, 2014, Colombia’s financial system was comprised of 22 banks (13 domestic and 9 foreign), 5 corporaciones financieras (financial corporations), 21 compañías de financiamiento comercial (commercial financing companies) and a number of securities brokerage houses and other non-banking institutions, such as insurance companies, trust companies and bonded warehouses. The main types of financial institutions are described below.
Banks. The Government owns one of the 13 Colombian banks. Commercial banks can offer a full scale of retail (including mortgage) and corporate banking services with the exception of investment banking and financial leasing.
Financial corporations. Financial corporations are specialized institutions that mainly make equity investments in and medium-term loans to various companies. Financial corporations also engage in project finance, an activity that has increased in recent years. Although they may engage in some banking activities, financial corporations are prohibited from receiving demand deposits and instead rely on savings, time deposits, certificates of deposit, bonds, intermediation of lines of credit from multilateral institutions and short-term deposits from companies and individuals to meet their funding needs. Most financial corporations are private sector institutions.
Commercial financing companies. Commercial financing companies specialize in providing working capital financing and credit for the purchase of consumer goods, but may also participate as intermediaries in foreign exchange transactions, conduct leasing operations and obtain short-term deposits.
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The Colombian financial system also includes institutions that promote specific sectors of the Colombian economy, such as FEN (later becoming FDN (Financiera de Desarrollo Nacional S.A.)). See “Economy—Role of the State in the Economy; Privatization—State-Owned Financial Institutions.”
Decree 4174 of 2011 changed FEN into FDN and broadened its authority beyond the energy sector so that it can provide funding to other sectors of the economy. The FDN funds long term infrastructure projects in order to boost competitiveness and economic growth.
The following table shows the number of financial institutions and the percentage of loans and deposits corresponding to each category.
Colombian Financial System
as of December 31, 2014
| Number | % of Loans | % of Deposits | ||||||||||
| Banks |
||||||||||||
| Domestic Banks |
13 | 64.3 | % | 66.1 | % | |||||||
| State-Owned Banks |
1 | 0.3 | % | 4.4 | % | |||||||
| Foreign Banks |
9 | 29.9 | % | 28.7 | % | |||||||
|
|
|
|
|
|
|
|||||||
| 22 | 94.2 | % | 94.8 | % | ||||||||
| Financial Corporations |
5 | 0.1 | % | 0.7 | % | |||||||
| Commercial Financing Companies(1) |
21 | 5.7 | % | 4.6 | % | |||||||
| Special State-Owned Institutions(2) |
11 | 7.0 | % | 5.6 | % | |||||||
|
|
|
|
|
|
|
|||||||
| Total |
59 | 100.0 | % | 100.0 | % | |||||||
|
|
|
|
|
|
|
|||||||
Totals may differ due to rounding.
| 1: | Includes companies specialized in leasing. |
| 2: | Includes FDN, Bancoldex, Financiera de Desarrollo Territorial (Territorial Development Financing Agency or “FINDETER”), Fondo para Financiamiento del Sector Agropecuario (Agricultural Sector Financing Fund or “FINAGRO”), Fondo Financiero de Proyectos de Desarrollo (Financial Fund for Development Projects or “FONADE”), Fondo Nacional del Ahorro (National Savings Fund or “FNA”), Fondo de Garantías de Instituciones Financieras (Financial Institutions Guarantee Fund or “FOGAFIN”), Fondo de Garantías de Entidades Cooperativas (Cooperative Institutions Guarantee Fund or “FOGACOOP”), Fondo Nacional de Garantías (National Fund of Guarantees or “FNG”), Instituto Colombiano de Crédito Educativo y Estudios Técnicos en el Exterior (Colombian Institute of Educational Credit and Overseas Technical Studies, or “ICETEX”) and Caja de Vivienda Militar. |
| Source: | Financial Superintendency. |
During 2013, the Financial Superintendency gave approval to Coopcentral, a cooperative, through Resolutions 1683 of 2012 and 1635 of 2013, to become and operate as a bank so it could expand its operations.
The principal regulators of the financial institutions and the financial markets are the Ministry of Finance, Banco de la República and the Financial Superintendency. The Financial Superintendency was created by combining the Superintendency of Banks and the Superintendency of Securities into one office under Decree 4327 of 2005.
In 1989, the Government promulgated rules, which were further amended in 1994, setting forth the procedures to be followed in classifying loans as “non-performing” on the basis of specific risk and performance factors, establishing reserve requirements for loans and implementing capital adequacy requirements consistent with the standards recommended under the Basel accords. These rules are intended to improve the Colombian banking system and to ensure that standards followed by Colombian commercial banks are consistent with those followed by banks in other countries. Under these rules, banks are required to maintain net technical capital equal to at least 9.0% of their risk-weighted assets. The aggregate net technical capital (or solvency ratio) of Colombian banks was at 15.1% of risk-weighted assets on December 31, 2014. 43 basis points above the level recorded on December 31, 2013.
During the 1990’s and early 2000’s, the Government took steps to prevent a recurrence of past problems in the financial sector (particularly those problems of the early 1980’s that caused the Government to assume ownership of several commercial banks to prevent their failure), including the promulgation of
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stringent banking regulations and market-oriented foreign exchange policies. Law 45 of 1990 introduced the universal banking model, which permits commercial banks, through separate subsidiaries, to engage in stock brokerage, leasing, factoring, investment banking and other related activities, thereby stimulating competition among financial institutions and consolidating the financial sector.
In addition, under Law 45, foreign investment is now permitted in all types of financial institutions with no restrictions on the level of foreign ownership. As a result, with prior approval of the Financial Superintendency, foreign entities are able either to purchase controlling interests in commercial banks or to increase their ownership in existing commercial bank subsidiaries. Law 45 has led to increased foreign investment in the banking sector.
Net profits of the financial sector, excluding special state owned institutions, increased from Ps. 5,859.0 billion in 2010 to Ps. 6,824.1 billion in 2011, Ps. 7,324.5 billion in 2012, Ps. 7,468.1 billion in 2013 and Ps. 8,789.2 billion in 2014. The Government did not liquidate any financial institutions from 2010 through 2014.
The following table shows the results of the financial sector as of and for the year ended December 31, 2014.
Selected Financial Sector Indicators
(in millions of pesos as of and for
the year ended December 31, 2014)
| Assets | Liabilities | Net Worth | Earnings | |||||||||||||
| Banks |
Ps. | 442,117,285 | Ps. | 380,025,461 | Ps. | 63,521,294 | Ps. | 7,927,657 | ||||||||
| Non-Banking Financial Institutions(1) |
36,480,210 | 27,442,296 | 10,467,383 | 861,576 | ||||||||||||
| Special State-Owned Institutions(2) |
49,519,956 | 41,782,344 | 7,737,612 | 366,672 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total |
Ps. | 478,597,495 | Ps. | 407,467,757 | Ps. | 72,559,208 | Ps. | 8,789,232 | ||||||||
Totals may differ due to rounding.
| 1. | Includes Financial Corporations and Commercial Financing Companies. |
| 2. | Includes FDN, Bancoldex, FINDETER, FINAGRO, FNA, FOGAFIN, FONADE, FOGACOOP, FNG and ICETEX. |
| Source: | Financial Superintendency. |
FOGAFIN, the Colombian insurance deposit fund, is responsible for implementing many of the Government’s measures to support the financial sector. FOGAFIN’s primary mission is to maintain stability and public confidence in the Colombian financial institutions.
In response to the economic downturn in 1998-1999, a recapitalization program was launched by the Government in the second quarter of 1999 to assist small- and medium-sized banks that were economically viable but had only limited access to international capital. The objective of the program was to strengthen the balance sheets of the participating banks by writing off non-performing assets and injecting additional capital from both cash contributions from shareholders and loans from FOGAFIN to the shareholders. These proceeds were used to purchase FOGAFIN-issued bonds, which were then contributed to the banks. The shareholders were required to pledge the stock of their banks with a value equal to 133% of the principal amount of the loans as security for the repayment of the FOGAFIN loans. The bonds issued by FOGAFIN were either held on the bank’s balance sheet or sold for cash. The end result of this recapitalization was that the participating banks achieved a ratio of net capital to risk-weighted assets of 10%, one percentage point higher than the then minimum requirement of 9%.
Although this program was intended to cover both private and state-owned financial institutions, in practice, the recapitalization of state-owned banks required additional measures, including the transfer of non-performing assets to new special purpose entities and the subsequent sale of those assets, the administrative reorganizations of the banks and the eventual privatization of the banks.
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Fifteen private institutions (AV Villas, Banco Colpatria, Banco Superior, Banco de Crédito, Interbanco, Banco Unión Colombiano, Colmena, Conavi, Corfinorte, Coltefinanciera CFC, Multifinanciera, Credinver, Confinanciera, Megabanco and Financiera FES) joined the FOGAFIN program between 1999 and 2005. By the end of 2004, the participating institutions had received Ps. 779.0 billion in capital, which came from long-term loans to finance the purchase of FOGAFIN-issued bonds. With the exception of the three institutions liquidated in 2002 and 2003, the financial institutions that took advantage of the FOGAFIN credit line have improved considerably, with their indicators now approaching those of other private financial institutions. During 2006-2014, FOGAFIN did not establish any new credit lines and no private institutions joined the FOGAFIN program.
The Government assistance program for private financial institutions was designed to be self-financing and to yield returns to help pay for possible defaults. FOGAFIN issues bonds yielding the average short-term composite reference rate (DTF) and lends these bonds to financial institutions for terms of one to three years at the rate of DTF + 2% and terms of four to seven years at the rate of DTF + 3%. It is estimated that the Government will not incur costs with respect to the assistance program, except for credit support provided to Interbanco, a private commercial bank.
As of December 31, 2014, there was no outstanding Government assistance to state-owned institutions or financial aid given to financial institutions or provision of credit support in the form of interest payments.
Since 1998, FOGAFIN assumed management responsibility and control of four banks (Banco del Estado, Banco Uconal, Bancafé and Interbanco), a savings and loan institution (Granahorrar) and two private consumer credit institutions (Fundación FES Compañía de Financiamiento Comercial and Corficafe). In managing these financial institutions, the Central Government, along with FOGAFIN, has formulated a strategy based on the same principles followed by the private banks for improving the institutions’ balance sheets and increasing their net worth, in order to increase their financial viability. Granahorrar was privatized when Banco Bilbao Vizcaya Argentaria purchased Granahorrar in 2005. Bancafé was bought by Banco Davivienda S.A. in 2007.
Liquidity and Credit Aggregates
The total amount of loans outstanding, including leasing, from Colombian financial institutions was Ps. 324.8 trillion at December 31, 2014, Ps. 281.8 trillion at December 31, 2013, Ps. 248.1 trillion at December 31, 2012, Ps. 215.3 trillion at December 31, 2011 and Ps. 175.9 trillion at December 31, 2010. Leasing has been included in the amount of loans outstanding beginning in 2010 as a result of changes made by the Financial Superintendency through Circular Externa 35 of 2009 that came into force on April 1, 2010. Past due loans decreased in absolute terms from Ps. 5.1 trillion at December 31, 2010 to Ps. 5.4 trillion at December 31, 2011, but past due loans increased to Ps. 7.0 trillion at December 31, 2012 and further to Ps. 8.0 trillion at December 31, 2013. At December 31, 2014, past due loans stood at Ps. 9.6 trillion. As a percentage of total loans, past due loans decreased from 2.9% at December 31, 2010 to 2.5%, at December 31, 2011 and to 2.8% at December 31, 2012. Past due loans as a percentage of total loans was 2.8% in 2013 and increased to 3.0% in 2014. Provisions as a percentage of past due loans increased from 171.2% at December 31, 2010 and to 183.5% at December 31, 2011. As of December 31, 2012, provisions decreased to 162.2% and, as of December 31, 2013, decreased further to 161.2%. Finally, the provisions as of December 31, 2014 decreased to 151.7%. The following table shows selected monetary indicators for the years indicated.
Selected Monetary Indicators
| 2010 | 2011 | 2012 | 2013 | 2014 | ||||||||||||||||
| Ml(1) (percentage change) |
17.8 | 11.0 | 7.1 | 16.4 | 9.4 | |||||||||||||||
| M2(2) (percentage change) |
10.2 | 18.9 | 16.3 | 15.0 | 8.5 | |||||||||||||||
| M3(3) (percentage change) |
11.3 | 18.2 | 15.5 | 13.7 | 8.8 | |||||||||||||||
| Credit from the Financial System (percentage change) (4) |
28.5 | 23.1 | 16.3 | 13.0 | 16.2 | |||||||||||||||
| Discount Rate(5) (percent) |
3.2 | 4.0 | 5.0 | 3.4 | 3.9 | |||||||||||||||
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| 1: | Currency in circulation plus demand deposits. |
| 2: | Ml plus certificates of deposit plus savings deposits. |
| 3: | M2 (i.e., currency in circulation plus liabilities subject to minimum reserve requirements) and bonds issued by the financial system. |
| 4: | Gross credit to private sector. Financial system excludes Banco de la República. |
| 5: | Banco de la República’s one-day discount rate for liquidity to the financial system. Weighted average for the year. |
| Source: | Banco de la República. |
Interest Rates and Inflation
During 2010, the average short-term composite reference rate, or DTF, decreased to 3.7%. The average DTF, increased during 2011 and 2012 to 4.2% and 5.4%, respectively. The average DTF decreased to 4.2% in 2013 and to 4.1% in 2014. The lowest point for DTF in 2014 was in May when it was at 3.8% and the highest point for DTF in 2014 was in November when the rate was at 4.4%.
The Central Bank’s policy has been to reduce inflation gradually to minimize the impact on economic growth. Since 1971, Colombia has experienced year-to-year consumer inflation rates ranging from a high of 32.4% in 1990 to a low of 3.7% in 2014. The decline in consumer inflation rates from the 25-30% range of the late 1980’s and early 1990’s was due in part to the effective implementation of a monetary policy that removed excess liquidity from the economy, providing only the amount of cash necessary for the optimal performance of the economy. As of December 31, 2010, the consumer inflation rate was 3.2% mainly due to increased prices of oil and nonperishable food. The consumer inflation rate for 2010 was within Banco de la República’s established target range of between 2.0% and 4.0% for 2010. During 2011, the consumer inflation rate recorded several increases, mainly due to the rise in food prices brought on by floods caused by severe rains, an increase in petroleum prices. Between October and December 2011, however, the consumer inflation rate decreased by 29 basis points, finishing on December 31, 2011 at 3.7%, a figure that was within the target range established by Banco de la República of between 2.0% and 4.0%. As of December 31, 2012, the consumer inflation rate was 2.4%, within Banco de la Reública’s target range of between 2.0% and 4.0%. A smaller increase in the prices of food, transportation and communications contributed to the lower consumer inflation rate compared to 2011. On the other hand, the inflation rate with respect to the prices of entertainment, health and clothing increased in 2012 compared to 2011. As of December 31, 2013, the consumer inflation rate stood slightly under the target range at 1.9%. The decrease in the prices of food, transport, housing and education contributed to the lower inflation rate. On the other hand, the prices of communications, entertainment and clothing saw an increase in 2013 compared to 2012. As of December 31, 2014, increases in the prices of food, education and housing contributed to a higher consumer inflation rate of 3.7% compared to 2013.
Banco de la República reduced overnight interest rates to 3.0% on May 3, 2010. There were seven increases of 25 basis points each on February 28, March 22, May 2, May 31, June 20 and August 1 and November 28, 2011, and the discount rate increased from 3.0% to 4.75% during the course of 2011. In 2012, Banco de la República adjusted the discount rate six times from a high of 5.00% to a low of 4.25%. In 2013, Banco de la República adjusted the discount rate three times further lowering the rate from a high of 4.00% a low of 3.25%. The discount rate was increased by 25 basis points on April 25, 2014 to 3.50%, and raised an additional 25 basis points on May 30, 2014 to 3.75%. The increases were made because Banco de la Republica decided to phase out its monetary stimulus due to the improving economic situation of the country. On June 20, 2014, Banco de la República decided to increase the discount rate by 25 basis points to 4.0%, mainly because consumer inflation and first quarter GDP growth (6.4%) were higher than expected. Due to continued weakness in global demand and lower oil and raw material prices, Banco de la República increased the discount rate by 25 basis points to 4.25% on August 1, 2014. Finally, Banco de la República increased the
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discount rate to 4.5% on September 1, 2014 to combat higher seasonal inflation in entertainment services (2.8%) and transportation (3.2%) in the last quarter of the year. Through August 2015, Banco de la República maintained the interest rate at 4.5% due to a low increase in inflation, lower economic growth in the United States and Euro Zone, the risk of a greater deterioration in the Chinese economy, as well as the recent Yuan devaluation, low oil prices, low international demand, a possible increase in the United States interest rates made by the Federal Reserve.
The producer price index stood at 4.4% in 2010, 5.5% in 2011 and negative 3.0% in 2012. The producer price index stood at negative 0.5% in 2013 and increased to 6.3% in 2014.
Monetary policy has also focused on counterbalancing the effect of large capital inflows and maintaining the stability of the real exchange rate. To this end, from time to time the Government has imposed taxes on transfers of foreign currencies to Colombian residents from abroad, required mandatory investment of foreign exchange receipts in negotiable “exchange certificates” and imposed deposit requirements with respect to foreign currency denominated indebtedness of less than a specified term. The next section discusses foreign exchange rates in further detail.
In February 2015, DANE introduced a new methodology for calculating the producer price index (“PPI”) based on recommendations from the IMF, the OECD and Banco de la República. While the old methodology measured the average monthly change in prices of a basket of domestic supply of goods in the first stage of commercialization, including goods produced and sold by national companies and importers, the new methodology measures the average monthly change in prices of a basket of goods produced domestically. The new methodology has been applied to figures beginning in January 2015. As of June 2015, the year-to-date PPI was 1.07%.
The following table shows changes in the consumer price index and the producer price index and average 90-day deposit rates for the periods indicated.
Inflation and Interest Rates
| Period |
Consumer Price Index (CPI) |
Producer Price Index (PPI)(1) |
Short-Term Reference Rate (DTF)(2) |
|||||||||
| 2010 |
3.2 | 4.4 | 3.7 | |||||||||
| 2011 |
3.7 | 5.5 | 4.2 | |||||||||
| 2012 |
2.4 | (3.0 | ) | 5.4 | ||||||||
| 2013 |
1.9 | (0.1 | ) | 5.1 | ||||||||
| 2014 |
||||||||||||
| January |
2.1 | 1.00 | 4.0 | |||||||||
| February |
2.3 | 1.90 | 4.0 | |||||||||
| March |
2.5 | 2.58 | 3.9 | |||||||||
| April |
2.7 | 3.18 | 3.8 | |||||||||
| May |
2.9 | 3.26 | 3.8 | |||||||||
| June |
2.8 | 1.99 | 3.9 | |||||||||
| July |
2.9 | 1.96 | 4.1 | |||||||||
| August |
3.0 | 2.45 | 4.0 | |||||||||
| September |
2.9 | 2.63 | 4.3 | |||||||||
| October |
3.3 | 4.20 | 4.3 | |||||||||
| November |
3.7 | 3.73 | 4.4 | |||||||||
| December |
3.7 | 6.02 | 4.3 | |||||||||
| 2015 |
||||||||||||
| January |
3.8 | (1.28 | ) | 4.5 | ||||||||
| February |
4.4 | (3.23 | ) | 4.5 | ||||||||
| March |
4.6 | 0.44 | 4.4 | |||||||||
| April |
4.6 | (0.92 | ) | 4.5 | ||||||||
| May |
4.4 | (0.95 | ) | 4.4 | ||||||||
| June |
4.4 | 1.07 | 4.4 | |||||||||
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| 1: | Percentage change over the previous twelve months at the end of each month indicated, except for 2015 which registers percentage change from previous month. Figures for 2015 apply the new methodology announced by DANE as described above. |
| 2: | Average for each of the years 2010-2013 and, for each indicated month in 2014 and 2015, year-on-year of the DTF, as calculated by the Financial Superintendency. |
| Sources: | DANE and Banco de la República. |
Foreign Exchange Rates and International Reserves
Exchange Rates
From January 1994 to September 1999, Banco de la República maintained a band within which the exchange rate was permitted to fluctuate. On September 25, 1999, the central bank decided to abandon the band system and adopt a free-floating exchange rate system. This change was made only after an initial agreement with the IMF for an Extended Fund Facility had been reached, evidencing a commitment by multilateral organizations to support the Colombian economic program. The transition to the new free-floating foreign exchange regime did not result in a significant deterioration of the exchange rate.
As of December 31, 2010, the representative market rate was Ps. 1,914.0/$1.00, an appreciation of 6.4% from the peso’s value on December 31, 2009. As of December 31, 2011, the representative market rate was Ps.1,942.7/$1.00, a depreciation of 1.5% from the peso’s value on December 31, 2010. As of December 31, 2012, the representative market rate was Ps.1,768.2/$1.00, an appreciation of 9.0% from the peso’s value on December 31, 2011. As of December 31, 2013, the representative market rate was Ps. 1,926.8/$1.00, a depreciation of 9.0% from the peso’s value as of December 31, 2012. As of December 31, 2014, the representative market rate was Ps. 2,392.5/$1.00, a depreciation of 24.2% from the peso’s value on December 31, 2013. As of June 30, 2015, the peso’s value has continued to depreciate reaching a depreciation of 8.1% since December 31, 2014 to Ps. 2,585.11/$1.00.
On August 31, 2013, Banco de la República resumed the accumulation of international reserves through an average of daily purchases of $23.4 million in competitive auctions in response to indications of an exchange rate misalignment. From January to December 2013, Banco de la República accumulated $6.8 billion. From January to December 2014, Banco de la República accumulated $4.1 billion with average daily purchases of $18.2 million in competitive auctions.
As established by Decree 4712 of 2008 and in accordance with the technical criteria established by Resolution No. 262 of February 11, 2011, which governs the administration of excess liquidity, the General Directorate of Public Credit and the National Treasury is allowed to perform any transaction that Colombia may require in the foreign exchange market, including the purchase of foreign exchange in such amounts and at such times as it may determine from time to time and derivatives operations that consist of swaps and forward contracts over foreign exchange. As of July, 2015, the General Directorate of Public Credit and National Treasury had no current position in swaps and forward contracts over foreign exchange.
The following table shows the average and end-of-period peso/dollar exchange rates and the real exchange rate index for the dates and periods indicated.
Exchange Rates
| Representative Market Rate(1) |
||||||||||||
| Year | Average | End-of- period |
Real Exchange Rate Index(2)(3) Average |
|||||||||
| (pesos per U.S. dollar) | (Avg. 2010=100) | |||||||||||
| 2010 |
1,899.0 | 1,914.0 | 103.98 | |||||||||
| 2011 |
1,848.0 | 1,942.7 | 102,85 | |||||||||
| 2012 |
1,798.0 | 1,768.2 | 100.04 | |||||||||
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| Representative Market Rate(1) |
||||||||||||
| Year | Average | End-of- period |
Real Exchange Rate Index(2)(3) Average |
|||||||||
| (pesos per U.S. dollar) | (Avg. 2010=100) | |||||||||||
| 2013 |
1,863.13 | 1,926.83 | 106.20 | |||||||||
| 2014 |
||||||||||||
| January |
1,960.4 | 2,008.3 | 108.36 | |||||||||
| February |
2,040.5 | 2,054.9 | 111.53 | |||||||||
| March |
2,022.2 | 1,965.3 | 108.63 | |||||||||
| April |
1,939.3 | 1,935.1 | 103.98 | |||||||||
| May |
1,915.5 | 1,900.6 | 102.83 | |||||||||
| June |
1,888.10 | 1,881.19 | 101.37 | |||||||||
| July |
1,858.40 | 1,872.43 | 100.08 | |||||||||
| August |
1,899.07 | 1,918.62 | 100.84 | |||||||||
| September |
1,971.34 | 2,028.48 | 103.12 | |||||||||
| October |
2,047.03 | 2,050.52 | 104.77 | |||||||||
| November |
2,127.25 | 2,206.19 | 107.38 | |||||||||
| December |
2,344.23 | 2,392.46 | 114.34 | |||||||||
| 2015 |
||||||||||||
| January |
2,397.69 | 2,441.10 | 115.03 | |||||||||
| February |
2,420.38 | 2,496.99 | 112.46 | |||||||||
| March |
2,586.58 | 2,576.05 | 115.42 | |||||||||
| April |
2,495.36 | 2,388.06 | 112.02 | |||||||||
| May |
2,439.09 | 2,533.79 | 111.20 | |||||||||
| June |
2,554.94 | 2,585.11 | 114.69 | |||||||||
| 1: | Representative market rate. as calculated by the Financial Superintendency. |
| 2: | Colombian Peso Real Exchange Rate Index “1”: Based on the producer price index for non-traditional goods in global trade. The real exchange rate index is calculated by adjusting the nominal exchange rate by the producer price index of Colombia’s trading partners and the domestic producer price index. Yearly data corresponds to December of each year. From May 2015 Real Exchange Rate Index base is 2010. Producer price index figures used in calculating Colombian Peso Real Exchange Rate Index for 2015 use the new methodology described above. |
| 3: | The Real Exchange Rate Index figures for 2010-2014 are preliminary. |
| Source: | Superintendencia Financiera, Banco de la República. |
International Reserves
Banco de la República’s gross international reserves increased from $28,463.5 million at December 31, 2010 to $32,302.9 million at December 31, 2011. As of December 31, 2012, gross international reserves further increased by $5,171.2 million to $37,474.1 million and by December 31, 2013, gross international reserves were $43,639.3 million. As of December 31, 2014, gross international reserves increased by $3,688.8 million to $47,328.1 million. The increase in international reserves in 2010 was mainly due to intervention by Banco de la República in the foreign exchange market and the increase in special drawing rights (SDR) allocated by the IMF. In December 2011, Banco de la República decided to resume the accumulation of international reserves mainly due to three factors: low interest rates in the developed economies, a decision to have a more conservative risk profile of the central bank’s portfolio and the depreciation of the euro against the dollar by 3% in 2011. During 2012 and 2013, Banco de la República continued accumulating international reserves mainly due to the adoption of a conservative risk profile in light of the global financial crisis. In July 2014, Banco de la República decided to increase the daily amount of dollar purchases and continued accumulating international reserves, totaling $2.0 billion between July and September 2014, buying at least $30 million daily. During October 2014, Banco de la República resumed accumulating international reserves through average daily purchases of $10.0 million in competitive auctions. In November 2014, Banco de la República purchased $ 165.0 million in the foreign exchange market through the auction mechanism of direct purchase. From January 2014 to December 2014, Banco de la República accumulated $4.1 billion. As of February 2015, Banco de la República decided not to continue increasing international reserves. Year-to-date, Banco de la República has not made purchases of foreign exchange.
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Banco de la República invests its international reserves in a mix of currencies that reflects the profile of the country’s foreign debt. As of December 31 2014, the mix of currencies was approximately 87% in U.S. dollars, 5% in Canadian dollars, 4% in Australian dollars, 2% in British pounds sterling, 1% in New Zealand dollars and 1% in Swedish kronas.
On May 22, 2012, the Government issued Decree 1076 of 2012, which establishes a system to administer the “Fondo de Ahorro y Estabilización del Sistema General de Regalías,” or Savings and Stabilization Fund. Based on Legislative Act No. 05 of 2011, up to 30% of the income from the General System of Royalties will be disbursed to the Savings and Stabilization Fund. The General Directorate of Public Credit and National Treasury is responsible for transferring such royalties to the Savings and Stabilization Fund, which is managed by Banco de la República. For this purpose, the General Directorate of Public Credit and National Treasury, at its sole discretion, may buy dollars in the secondary market. Royalties are derived from natural resources, such as oil, coal and other mining activities. As of December 31, 2014, royalties reached an aggregate amount of Ps. 27.9 trillion since inception and, as of June 30, 2015, transfers in dollars into the Savings and Stabilization Fund since inception were $2.8 billion.
The following table shows the composition of the international reserves of Banco de la República at the end of the years indicated.
International Reserves
| 2010 | 2011 | 2012(1) | 2013(1) | 2014(1) | ||||||||||||||||
| (millions of U.S. dollars) | ||||||||||||||||||||
| Gross International Reserves |
||||||||||||||||||||
| Monetary Gold |
$ | 311.0 | $ | 524.1 | $ | 553.8 | $ | 399.9 | $ | 399.2 | ||||||||||
| Special Drawing Rights |
1,158.0 | 1,141.0 | 1,131.4 | 1,128.5 | 1.048.4 | |||||||||||||||
| International Monetary Fund |
259.8 | 369.6 | 392.3 | 433.3 | 416.4 | |||||||||||||||
| Investments |
26,308.1 | 29,831.8 | 34,857.8 | 41,117.4 | 44,913.0 | |||||||||||||||
| Others(2) |
426.7 | 436.4 | 538.7 | 560.3 | 551.1 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||
| 28,463.5 | 32,302.9 | 37,474.1 | 43,639.3 | 47,328.1 | ||||||||||||||||
| Less: Short- and Medium-Term Liabilities of Banco de la República |
11.7 | 2.5 | 7.5 | 6.6 | 5.0 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Net International Reserves |
$ | 28,451.8 | $ | 32,300.4 | 37,466.6 | 43,632.7 | 47,323.1 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Reserves (Months of Imports (FOB)) |
||||||||||||||||||||
| Goods(3) |
8.9 | 7.4 | 7.9 | 9.2 | 9.2 | |||||||||||||||
| Goods and Services(4) |
7.3 | 6.3 | 6.7 | 7.7 | 7.6 | |||||||||||||||
Totals may differ due to rounding.
| 1: | Preliminary. |
| 2: | Includes deposits in Latin American Reserve Fund, Cash, Andean pesos, sight deposits, remittance in process and compensation agreements. |
| 3: | Reflects imports of goods, as well as special trade operations. |
| 4: | Contains items included in (3) above, plus imports of factor and non-factor services. |
| Source: | Banco de la República. |
Securities Markets
On July 3, 2001, the Bolsa de Valores de Colombia (Colombian Stock Exchange) was formed as a result of the merger of the three then existing stock exchanges (Bolsa de Bogotá, Bolsa de Medellín and Bolsa de Occidente). Both debt and equity securities are traded on the Colombian Stock Exchange, although the vast majority of securities traded are fixed-income debt securities. The Colombian Stock Exchange has adopted an index called the Indice General de la Bolsa de Colombia (Colombian Stock Exchange Indicator, or “IGBC”), which comprises a group of equity securities the composition of which is determined in part by the frequency of trading in each quarter. As of December 31, 2010, the IGBC increased by 33.3% to 15,496.77 points as compared to December 31, 2009, but on December 31, 2011 the IGBC decreased by 15.6% to 12,665.71 points. On December 31, 2012, the IGBC further increased by 13.6% to 14,715.84 points. As of December 31, 2013, the IGBC had decreased by 11.8% compared to 2012. As of December 31, 2014, the IGBC had decreased by 11.0% compared to 2013, reaching a level of 11,634.6 points.
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On January 15, 2008, the COLCAP and COL20 stocks indexes were introduced to the market in order to replace progressively the IGBC. COLCAP measures the variation of the 20 most traded stocks in the Colombian Stock Exchange by level of capitalization, while COL20 measures the variation of the 20 most traded stocks in the Colombian Stock Exchange by level of liquidity. The initial level of both indexes was 1,000 increased to 1,823.70 and to 1,452.68, respectively, by December 2010. By December 2011, COLCAP decreased by 13.8% to 1,571.55, and COL20 decreased by 11.4% to 1,287.63. By December 2012, COLCAP increased by 16.6% to 1,832.75, and COL20 increased by 4.7% to 1,348.01. By December 2013, both indexes decreased, with the COLCAP having decreased by 12.4% to 1,606.33 points and the COL20 having decreased by 7.1% to 1,252.75 points. As of December 31, 2014, both indexes decreased, with the COLCAP decreasing by 5.8% to 1,513.0 points and the COL20 decreasing by 14.1% to 1,076.3 points.
The Colombian Stock Exchange began trading standardized derivatives in September 2008 with the negotiation of a five-year TES futures contract. The number of contracts traded increased to 288,003 in 2010 and then further to 795,298 in 2011. In 2012, the Colombian Stock Exchange continued its strategy of consolidating and strengthening the local derivatives market through the promotion of existing products, the creation of new ones and the implementation of an intensive training and educational program. In 2013 this strategy continued, along with the aim of further internationalizing the Colombian stock market. The number of derivatives contracts traded during 2013 was 685,135 contracts, representing an 8.65% increase from the 630,590 contracts negotiated in 2012. The increase in trading volume was due mainly to the legal action taken against InterBolsa, a Colombian securities broker, which resulted in the closure of the largest stock market operator and created distrust towards the stock market in general. The trading volume in the derivatives market during 2014 was 941,620 contracts, representing a 37.4% increase from the previous year, a historic high for traded futures in the Colombian stock market.
The Colombian Stock Exchange is owned by member firms responsible for developing and implementing regulations governing trading on the exchange. Although self-regulating, the exchange remains subject to the approval and supervision of the Financial Superintendency. The market capitalization of the Colombian Stock Exchange was Ps. 364.11 trillion on December 31, 2014, compared to Ps. $415.54 trillion on December 31, 2013.
The total value of securities traded on the Colombian Stock Exchange during 2014 was Ps. 1,403.43 trillion, representing a nominal decrease of 10.35% in peso terms as compared to 2013.
Equity trading during 2014 amounted to approximately Ps. 40.4 trillion, or 1.29% of the total value of securities traded. This represents a nominal decrease of 1.31% in the total value of equity trading from 2013.
On May 30, 2011, the “Mercado Integrado Latinoamericano” (MILA) began its operations. This project involves the integration of technology platforms of the Colombian, Chilean and Peruvian stock markets. The MILA allows investors to carry out cash transactions in investments in shares listed on the Colombian Stock Exchange, Bolsa de Comercio de Santiago (BCS) and Bolsa de Valores de Lima (BVL), involving the three securities depositaries, DECEVAL (Déposito Centralizado de Valores de Colombia), CAVALI (Registro Central de Valores y Liquidaciones) and the Central Securities Depository (CSD) of Colombia, Peru and Chile, respectively. The main objective of the integration is to develop the capital markets by offering investors a wider range of securities as well as larger funding sources for issuers. The creation of MILA is expected to diversify, expand and improve the attractiveness of trading of securities in the three countries for both domestic and international investors. By December 2013, the total number of issuers registered with MILA was 590. As of June 30, 2015, the number of registered issuers remained at 590.
D-77
PUBLIC SECTOR FINANCE
General
The Constitution and the Budgetary Organic Law of 1996 govern Colombia’s budgetary process. The budget process requires the participation of all governmental ministries and agencies. The Ministry of Finance prepares a revenue and expenditure summary for the Government and public sector agencies, and then presents it in the form of a bill to Congress by the July prior to the beginning of the next fiscal year. Both houses of Congress must approve the budget by November of each year. It is then presented to the President, who has veto power over individual expenditures. Expenditure increases, but not expenditure reductions, must be approved by Congress as budget amendments. Local legislatures approve their budgets in accordance with the general procedures established pursuant to departmental and municipal law.
The Constitution and Law 60 of 1993 (described below under “—Public Sector Accounts—Revenues”) require the Government to transfer funds to departmental and municipal governments. Although the Government does not finance departmental and local government deficits, all domestic bond offerings and foreign debt incurred by these governmental entities must be approved by the Central Government. In addition, under Law 358 of 1997, municipalities and departments may not incur debt service obligations beyond a certain percentage of their operational savings (defined as current revenues less current expenditures).
The budgets for state-owned companies are evaluated by the Ministry of Finance and the National Planning Department, approved by the Consejo Superior de Política Fiscal (“CONFIS”) and sanctioned by Presidential decree. These budgets are devised in conformity with the macroeconomic plan adopted by the Government each fiscal year, which sets general revenue and expense targets for the state-owned companies. During the year, the Government may modify these budgets.
The budgets of Government ministries and agencies, departmental and municipal governments and state-owned companies constitute the consolidated non-financial public sector fiscal accounts. These accounts exclude both the revenues and the expenses of state-owned financial institutions. State-owned financial institutions, development banks and commercial banks have a separate budget process supervised by the Financial Superintendency.
The Contraloría General de la República (General Comptroller of the Republic) audits the financial accounts of the Government, which are submitted annually to Congress for approval.
Under the 1991 Constitution, royalties received from the exploitation of nonrenewable natural resources that are not directly distributed to departments and municipalities where the natural resources are located or transported are paid into the Fondo Nacional de Regalías (National Royalties Fund). Funds from the National Royalties Fund are used to finance mining development, environmental protection and other regional development projects, including health, education, water and sanitation projects.
In 1995, the Fondo de Ahorro y Estabilización Petrolera (Oil Stabilization and Savings Fund or “FAEP”) was created to monitor the macroeconomic effects of the large foreign exchange inflows due to the then recently discovered oil reserves and to ensure that local governments prudently use the revenues generated from petroleum royalties. Ecopetrol S.A., the National Royalties Fund and the departments and municipalities where oil is produced contribute to the FAEP. Banco de la República administers FAEP. Under the law establishing FAEP, royalties from petroleum production in excess of a predetermined amount payable to the national and local governments are invested abroad through FAEP and are only disbursed for infrastructure projects and social expenditures.
In July 2007, following the announcement by the Government of a public offering of 20% of Ecopetrol S.A.’s shares, Congress approved the National Development Plan for 2006-2010 (the “2006-2010 Development Plan”). Under Article 143 of the 2006-2010 Development Plan, Ecopetrol S.A. was no longer required to contribute to the FAEP and instead it was required to transfer the excess royalties to the Central Government. The 2006-2010 Development Plan contemplated that 60% of the fund balance in FAEP would be disbursed to the Central Government in 2008, with the remaining balance being transferred to the Central
D-78
Government in 2009 and 2010 in order to achieve the Government’s goal of gradually receiving the funds from FAEP. In 2008, FAEP transferred Ps. 2,329 billion (0.5% of GDP) to the Central Government. In 2009, FAEP transferred Ps. 920 billion (0.2% of GDP) to the Central Government. In 2010, FAEP transferred Ps. 370 billion (0.1% of GDP) to the Central Government. Following the transfer made in 2010, no further transfers by FAEP have been or will be made. Decree 1849 of 2013 established the maximum percentages of funds withdrawals per year until the liquidation of the FAEP in 2019. The Decree gives priority to withdrawals of local entities. The resources should be used to pay the debt of health entities and road investment according to articles 275 and 118 of National Development Plan 2010-2014.
Article 69 of the 2006-2010 Development Plan also created the Stabilization Fund for Fuel Prices (“FEPC”) and establishes, as an initial source of financing, part of the fund balance accumulated by Ecopetrol S.A. in FAEP. In 2008, FAEP transferred Ps. 420 billion (0.1% of GDP) to the FEPC. As of December 31, 2014, the total fund balance of the FEPC was a deficit of Ps. 1,346 billion, or -0.2% of GDP, compared with a deficit of Ps. 781 billion, or -0.1% of GDP, on December 31, 2013.
Public Sector Accounts
The following tables set forth revenues and expenditures (on a cash-flow basis) for the consolidated non-financial public sector for the 2010-2014 period, budgeted figures for 2015 (Law 1737 of December 2, 2014) and the resulting fiscal surplus or deficit as a percentage of GDP.
Non-financial Public Sector Revenues and Expenditures(1)
(billions of pesos)
| Budget 2015(5) |
||||||||||||||||||||||||
| 2010 | 2011 | 2012 | 2013 | 2014(2) | ||||||||||||||||||||
| Central Government |
||||||||||||||||||||||||
| Total Revenues |
Ps. | 74,957 | Ps. | 94,247 | Ps. | 107,067 | Ps. | 119,744 | Ps. | 125,904 | Ps. | 131,316 | ||||||||||||
| Expenditures |
||||||||||||||||||||||||
| Current Expenditures |
72,777 | 79,664 | 86,994 | 93,696 | 103,768 | 111,891 | ||||||||||||||||||
| Capital Expenditures |
20,931 | 26,887 | 32,367 | 41,269 | 41,364 | 41,231 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total Expenditures |
93,708 | 106,551 | 119,361 | 134,965 | 145,132 | 153,121 | ||||||||||||||||||
| Net Loans to Other Entities |
214 | 183 | 61 | (2 | ) | (11 | ) | 16 | ||||||||||||||||
| Accrual adjustments(3) |
2,054 | 5,020 | 3,085 | 1,427 | (861 | ) | 2,060 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| (Deficit)/Surplus |
(21,019 | ) | (17,507 | ) | (15,440 | ) | (16,645 | ) | (18,356 | ) | (23,881 | ) | ||||||||||||
| Decentralized Agencies |
||||||||||||||||||||||||
| Total Revenues |
8,153 | 9,648 | 12,537 | 14,845 | 15,195 | 15,391 | ||||||||||||||||||
| Expenditures |
||||||||||||||||||||||||
| Current Expenditures |
2,752 | 3,109 | 2,456 | 2,738 | 1,297 | 1,375 | ||||||||||||||||||
| Capital Expenditures |
5,110 | 6,332 | 10,167 | 12,043 | 13,543 | 13,961 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total Expenditures |
7,862 | 9,441 | 12,623 | 14,781 | 14,839 | 15,335 | ||||||||||||||||||
| Accrual adjustments(3) |
(107 | ) | 0 | 171 | 233 | (357 | ) | 0 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| (Deficit)/Surplus |
397 | 207 | (257 | ) | (168 | ) | 712 | 56 | ||||||||||||||||
| Local Public Sector(4) |
||||||||||||||||||||||||
| Total Revenues |
53,677 | 59,270 | 66,949 | 70,484 | 72,168 | 72,455 | ||||||||||||||||||
| Expenditures |
||||||||||||||||||||||||
| Current Expenditures |
33,478 | 34,300 | 37,650 | 38,647 | 39,741 | 36,259 | ||||||||||||||||||
| Capital Expenditures |
20,856 | 25,363 | 18,967 | 23,709 | 29,158 | 35,001 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total Expenditures |
54,334 | 59,663 | 56,617 | 62,356 | 68,898 | 71,260 | ||||||||||||||||||
| Net Loans to Other Entities |
(14 | ) | (10 | ) | (19 | ) | (24 | ) | (23 | ) | 0 | |||||||||||||
| Accrual adjustments(3) |
(150 | ) | 78 | 318 | (349 | ) | 83 | 0 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| (Deficit)/Surplus |
(521 | ) | (481 | ) | 9,995 | 8,454 | 3,164 | 1,195 | ||||||||||||||||
| Social Security |
||||||||||||||||||||||||
| Total Revenues |
46,132 | 49,104 | 56,891 | 57,951 | 71,239 | 72,914 | ||||||||||||||||||
| Expenditures |
||||||||||||||||||||||||
| Current Expenditures |
40,749 | 42,425 | 46,883 | 56,246 | 67,048 | 69,181 | ||||||||||||||||||
| Capital Expenditures |
8 | 19 | 14 | 17 | 16 | 40 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total Expenditures |
40,758 | 42,443 | 46,897 | 56,264 | 67,063 | 69,221 | ||||||||||||||||||
| Net Loans to Other Entities |
0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
| Accrual adjustments(3) |
540 | (180 | ) | 368 | (238 | ) | 173 | 0 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
D-79
| Budget 2015(5) |
||||||||||||||||||||||||
| 2010 | 2011 | 2012 | 2013 | 2014(2) | ||||||||||||||||||||
| (Deficit)/Surplus |
4,835 | 6,840 | 9,626 | 1,925 | 4,002 | 3,694 | ||||||||||||||||||
| Coffee Fund |
||||||||||||||||||||||||
| Total Revenues |
1,246 | 2,254 | 1,583 | 2,359 | 2,780 | 2.814 | ||||||||||||||||||
| Expenditures |
||||||||||||||||||||||||
| Current Expenditures |
1,445 | 1,424 | 1,321 | 2,282 | 1,900 | 1,955 | ||||||||||||||||||
| Capital Expenditures |
41 | 11 | 13 | 12 | 12 | 13 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total Expenditures |
1,486 | 1,434 | 1,334 | 2,295 | 1,912 | 1,968 | ||||||||||||||||||
| Net Loans to Other Entities |
0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
| Accrual adjustments(3) |
129 | 587 | 212 | 170 | 813 | 876 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| (Deficit)/Surplus |
(368 | ) | 232 | 37 | (106 | ) | 55 | (30 | ) | |||||||||||||||
| Non-financial Public Enterprises |
||||||||||||||||||||||||
| Total Revenues |
35,466 | 35,466 | 40,269 | 44,329 | 45,921 | 44,194 | ||||||||||||||||||
| Expenditures |
||||||||||||||||||||||||
| Current Expenditures |
28,757 | 32,946 | 38,885 | 40,636 | 44,863 | 39,596 | ||||||||||||||||||
| Capital Expenditures |
2,450 | 3,381 | 2,316 | 3,989 | 3,830 | 4,464 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total Expenditures |
31,207 | 36,327 | 41,201 | 44,625 | 48,694 | 44,060 | ||||||||||||||||||
| Net Loans to Other Entities |
(228 | ) | (193 | ) | (81 | ) | (41 | ) | 29 | (6 | ) | |||||||||||||
| Accrual adjustments(3) |
9 | (212 | ) | 125 | 90 | 97 | 74 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| (Deficit)/Surplus |
4,022 | (841 | ) | (1,137 | ) | (428 | ) | (2,841 | ) | 53 | ||||||||||||||
| Total Consolidated Non-financial Public Sector (Deficit)/Surplus |
Ps. | (12,655 | ) | Ps. | (11,549 | ) | Ps. | 2,824 | Ps. | (6,968 | ) | Ps. | (13,264 | ) | (18,914 | ) | ||||||||
| Primary (Deficit) Surplus |
Ps. | (651 | ) | Ps. | 7,059 | Ps. | 21,984 | Ps. | 10,956 | Ps. | 5,483 | Ps. | 3,836 | |||||||||||
(footnotes appear on the following table)
Non-financial Public Sector Surplus (Deficit)(1)
(as a percentage of GDP)(6)
| Government Sectors | 2010 | 2011 | 2012 | 2013(2) | 2014(2) | Budget 2015(5) |
||||||||||||||||||
| Central Government |
(3.9 | )% | (2.8 | )% | (2.3 | )% | (2.3 | )% | (2.4 | )% | (3.0 | )% | ||||||||||||
| Decentralized Agencies |
0.2 | 0.1 | 0.0 | (0.1 | ) | 0.1 | 0.0 | |||||||||||||||||
| Local Public Sector(4) |
(0.1 | ) | (0.1 | ) | 1.5 | 1.2 | 0.4 | 0.1 | ||||||||||||||||
| Social Security |
1.0 | 1.1 | 1.4 | 0.3 | 0.5 | 0.5 | ||||||||||||||||||
| Coffee Fund |
(0.1 | ) | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |||||||||||||||||
| Other,. including FAEP |
0.0 | (0.2 | ) | (0.2 | ) | (0.1 | ) | (0.4 | ) | 0.0 | ||||||||||||||
| Total Consolidated Non-financial Public Sector (Deficit)/Surplus |
(3.1 | ) | (1.8 | ) | 0.4 | (1.0 | ) | (1.8 | ) | (2.3 | ) | |||||||||||||
| Primary Surplus |
(0.1 | )% | 1.1 | % | 3.3 | % | 1.6 | % | 0.7 | % | 0.5 | % | ||||||||||||
Totals may differ due to rounding.
| 1: | All figures calculated according to IMF methodology, which includes privatization, concession and securitization proceeds as part of public sector revenues. Privatization, concession and securitization proceeds for the non-financial public sector totaled Ps. 533 billion, Ps. 5,114 billion and Ps. 868 billion in 2010, 2011 and 2012 respectively. There were no privatization, concession and securitization proceeds in 2013 and 2014. The 2015 Financial Plan doesn’t include revenues from other sources. |
| 2: | Figures for 2014 according to Cierre Fiscal GNC 2014 released by CONFIS on May 19, 2015. |
| 3: | Adjustment of certain cash expenditures to an accrual basis. |
| 4: | Includes municipal and departmental governments and local non-financial enterprises, such as water, telephone and electricity companies and the Medellín metro system. |
| 5: | Based on 2015 assumptions and projected figures. |
| 6: | Based on GDP figures for 2014 and estimated GDP for 2015. |
| Sources: | National Department of Planning, IMF staff estimates, Banco de la República and CONFIS. |
In 2014, the Central Government deficit was 2.4% of GDP as compared to a deficit of 2.3% of GDP in 2013. The Central Government deficit for 2014 was Ps. 18,356 billion, an increase of10.3% from the Ps. 16,645 billion deficit registered in 2013. Central Government revenues increased by 5.1%, from Ps. 119,744 billion in 2013 to Ps. 125,904 billion, in 2014, while Central Government expenditures increased by 7.5%, from Ps. 134,965 billion in 2013 to Ps. 145,132 billion, in 2014. The increase in expenditures was primarily due to increases in operating and interest expenditures.
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In 2014, the consolidated non-financial public sector deficit totaled Ps. 13,264 billion, or 1.8% of GDP, as compared to a deficit of Ps. 6,968 billion, or 1.0% of GDP in 2013, and a surplus of Ps. 2,824 billion or 0.4% of GDP in 2012. The deficit of the consolidated non-financial public sector during 2014 was primarily due to a deficit in the non-financial public enterprises and a deficit in Central Government. The Government currently projects a consolidated non-financial public sector deficit of 2.3% of GDP for 2015. The Government currently projects a Central Government deficit in 2015 of 3.0% of GDP. However, no assurances can be given concerning actual results for the 2015 period and beyond.
In recent years, the Government’s fiscal policy has included the following long-term objectives:
| • | establishing a macroeconomic foundation for sustained growth; |
| • | directing Government resources to those sectors in which the Government has the greatest impact in supporting social development and fostering competition within the Colombian economy; and |
| • | restructuring the budgetary system to facilitate the constitutionally mandated increases in net transfers from the Central Government to departmental and municipal governments. |
The public sector deficit figures presented in this section do not include certain contingent liabilities of the public sector, including certain guarantees and indemnities given by public sector agencies to joint venture partners.
Revenues
In recent years, the Government has modernized the tax system and expanded the tax base through new tax reform legislation. The recent tax reforms were intended to create new jobs and reduce inequalities, and also to bring the tax system into compliance with the constitutional requirement that the Government transfer a portion of its current revenues to departmental and municipal governments. There are two types of required net transfers to departmental and municipal governments. First, the Government transfers revenues to departments for health and educational purposes. Second, the Government transfers revenues to municipalities for social and educational programs as well as infrastructure projects. Both types of transfers are currently calculated as a percentage of current revenue. The actual allocation made to each local government is based on formulas developed by the National Planning Department which take into account each locality’s administrative efficiency, ability to raise revenues independently, population and level of poverty. Net transfers required by Law 60 of 1993 totaled an estimated 26.3% of current revenue in 2014, as compared to 28.0% in 2013, 26.9% in 2012, 29.3% in 2011 and 34.0% in 2010. These constitutionally required transfers may be supplemented by discretionary transfers to departments and municipalities. In December 2001, a constitutional reform established new standards that local governments are required to follow with respect to funds transferred by the Central Government, enhancing the control and allocation of these funds, particularly in the education and health care sectors.
The following table shows the composition of the Government’s revenue (on a cash-flow basis).
Central Government Revenue
| 2010 | 2011 | 2012 | 2013 | 2014(1) | Budget 2015(3) |
|||||||||||||||||||
| Tax Revenue |
||||||||||||||||||||||||
| Income Tax |
35.5 | % | 35.5 | % | 40.8 | % | 37.4 | % | 29.9 | % | 28.7 | % | ||||||||||||
| Value-Added Tax |
39.0 | 37.2 | 33.9 | 28.9 | 30.8 | 34.0 | ||||||||||||||||||
| Wealth Tax |
2.7 | 3.4 | 3.0 | 2.7 | 3.3 | 3.7 | ||||||||||||||||||
| Tariffs |
6.3 | 4.3 | 3.3 | 3.3 | 3.2 | 3.5 | ||||||||||||||||||
| Other Indirect Taxes |
6.9 | 8.4 | 7.8 | 11.8 | 19.0 | 19.2 | ||||||||||||||||||
| 90.4 | 88.9 | 88.9 | 84.2 | 86.1 | 89.2 | |||||||||||||||||||
| Nontax Revenue(2) |
9.6 | 11.1 | 11.1 | 15.8 | 13.9 | 10.8 | ||||||||||||||||||
| 100.0 | 100.0 | 100.0 | 100.0 | 100.0 | 100.0 | |||||||||||||||||||
| Revenue (as a percentage of GDP)(4) |
13.6 | % | 15.2 | % | 16.1 | % | 16.9 | % | 16.6 | % | 16.2 | % | ||||||||||||
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Totals may differ due to rounding.
| 1: | Figures correspond to the Cierre Fiscal released by Dirección General de Política Macroeconómica (General Directorate of Macro Economic Policy) (Documento Asesores 004/2015). |
| 2: | Includes concession revenues, hydrocarbon duties, fines, other duties, other current revenues and capital revenues. |
| 3: | Projected figures. |
| 4: | Based on estimated GDP using new methodology implemented in 2008. |
| Sources: | Ministry of Finance and CONFIS. |
Central Government revenues totaled Ps. 125,904 billion (16.7% of GDP) in 2014 as compared to Ps. 119,744 billion in 2013, an increase of 5.1% in nominal terms. Total tax revenues increased by 7.5% in nominal terms in 2014 as compared to 2013.
Expenditures
Central Government expenditures totaled Ps. 145,132 billion in 2014 (19.2% of GDP), an increase of 7.5% in nominal terms from the 2013 level. Current interest payments increased by 3.8% in nominal terms in 2014 and current operational expenditures increased by 8.7% in nominal terms as compared to 2013 levels. Current investment expenditures decreased by 4.7% in nominal terms in 2014
Based on preliminary figures, in 2014 Central Government expenditures were allocated as follows:
| • | social expenditures, 54.8%; |
| • | interest payments, 12.0%; |
| • | defense and internal security, 11.9%; |
| • | government overhead, 4.0%; |
| • | justice, 5.8%; |
| • | infrastructure, 9.3%; and |
| • | transfers to local governments, 2.4%. |
Transfers to departments and municipalities reached Ps. 22,933 billion in 2010 (representing 24.1% of the total 2010 expenditures), Ps. 24,710 billion in 2011 (representing 22.1% of the total 2011 expenditures), Ps. 25,943 billion in 2012 (representing 21.2% of the total 2012 expenditures), Ps. 28,193 billion in 2013 (representing 24.9% of the total 2013 expenditures) and Ps. 28,634 billion in 2014 (representing 23.5% of the total 2014 expenditures). These transfers were made in accordance with the territorial transfer reform legislation enacted in December 2001 that provides for such transfers to be made based on the average revenue growth of Colombia over the previous four years, adjusted by the inflation rate plus a certain percentage, during a transition period from 2002-2007. In 2007, Congress passed a constitutional amendment that modified the formula to calculate these transfers. From 2008 to 2009, transfers to regional governments increased by the inflation rate plus 4% with an additional 1.3% increase for education. In 2010, transfers increased by 3.5% with an additional 1.6% increase for education. Transfers grew by 4.4% in 2011, 5.0% in 2012, 8.7% in 2013 and 1.6% in 2014.
One of the greatest challenges in public finance is the growing rate of pension liabilities for workers and retirees, combined with the fact that most territorial entities lack proper resources to pay these obligations. In December 1999, Congress enacted Law 549, which established the National Pension Fund for Territorial Entities. Law 549 provides for full funding of pension liabilities within 30 years from the date of its enactment. Both the Central Government and the territorial entities contribute to this fund, although the Central Government has not assumed the responsibility to pay these pension payments. The Central Government recognized, however, that further pension reform was necessary and as a result, Law 797 of 2003 was enacted. Law 797 of 2003 modified the official retirement age and increased payroll taxes in order to reduce the rate of growth of pension expenditures. Due to legal challenges brought before the Colombian Constitutional Court challenging certain provisions of Law 797, Law 860 of 2003 was enacted in December 2003 to cure certain procedural flaws. As of June 14, 2015, the net present value of the Central Government’s pension liability for the next fifty years (2014-2064), not including the transition cost, decreased by 0.9 percentage points from 73.3% of GDP to 72.4% of GDP between 2014 and 2015 (using a discount rate of 6%) and the annual expenditure by the Central Government for pension liabilities was 3.7% of GDP for 2014 and is estimated to be 3.7% of GDP for 2015.
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The following table shows the principal categories of Government expenditures, according to the General Directorate of the Budget of the Ministry of Finance.
Central Government Expenditures(1)
| 2010 | 2011 | 2012 | 2013 | 2014 | ||||||||||||||||
| Social Expenditures |
||||||||||||||||||||
| Education |
17.2 | % | 16.3 | % | 15.5 | % | 15.3 | % | 16.0 | % | ||||||||||
| Health |
6.7 | 6.1 | 8.0 | 8.0 | 10.2 | |||||||||||||||
| Potable Water and Sewage |
1.6 | 1.4 | 1.3 | 1.6 | 1.3 | |||||||||||||||
| Housing |
0.7 | 0.8 | 0.7 | 0.8 | 1.4 | |||||||||||||||
| Social Security |
21.0 | 21.9 | 20.5 | 21.1 | 20.2 | |||||||||||||||
| Other |
3.9 | 4.0 | 3.9 | 4.8 | 5.7 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| 51.2 | 50.5 | 49.9 | 51.6 | 54.8 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Justice |
5.5 | 7.2 | 7.2 | 5.6 | 5.8 | |||||||||||||||
| Defense and Security (Internal) |
14.6 | 13.3 | 13.2 | 12.9 | 11.9 | |||||||||||||||
| Infrastructure |
||||||||||||||||||||
| Mines and Energy |
1.6 | 1.7 | 2.1 | 2.1 | 1.7 | |||||||||||||||
| Transportation |
3.2 | 4.2 | 5.6 | 6.3 | 5.3 | |||||||||||||||
| Irrigation Projects and Agriculture |
1.1 | 1.0 | 1.5 | 2.3 | 1.6 | |||||||||||||||
| Environment |
0.2 | 0.2 | 0.2 | 0.2 | 0.3 | |||||||||||||||
| Other |
0.3 | 0.6 | 0.8 | 0.4 | 0.4 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| 6.4 | 7.7 | 10.3 | 11.3 | 9.3 | ||||||||||||||||
|
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|
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|
|
|
|
|
|
|||||||||||
| Government Overhead Expenses |
3.7 | 3.1 | 3.3 | 3.4 | 4.0 | |||||||||||||||
| Transfers to Local Governments(2) |
2.9 | 2.7 | 2.6 | 2.8 | 2.4 | |||||||||||||||
| Interest payments |
15.7 | 15.5 | 13.6 | 12.3 | 12.0 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Total Expenditures |
100 | % | 100 | % | 100 | % | 100 | % | 100 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| Expenditures (as a percentage of GDP)(3) |
17.6 | % | 17.6 | % | 18.2 | % | 19.0 | % | 19.5 | % | ||||||||||
Totals may differ due to rounding.
| 1: | 2014 figures are preliminary. |
| 2: | Figures only include transfers to municipalities, not to other regional governments. |
| 3: | Based on estimated GDP figures calculated using 2005 as the base year for calculating constant prices. |
| Sources: | Dirección General del Presupuesto (General Directorate of the Budget), CONFIS and Tesorería General de la República (National Treasury). |
2015 Budget
The 2015 budget became Law 1737 on December 2, 2014. According to the 2015 budget, the consolidated public sector deficit is expected to be 2.4% of GDP (Ps. 19,096 billion) and the consolidated non-financial public sector deficit is anticipated to be approximately 2.3% of GDP (Ps. 18,914 billion). The 2015 budget estimates a Central Government deficit of approximately 3.0% of GDP (Ps. 23,881 billion). Total non-financial public sector expenditures for 2015 are currently budgeted to reach Ps. 354,965 billion, out of which Ps. 153,121 billion corresponds to expenditures by the Central Government and Ps. 201,844 billion corresponds to expenditures by public entities at the national and local level and transfers to departmental and local governments.
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Under the 2015 budget, the Central Government’s revenues (on a cash-flow basis) are projected to total Ps. 131,316 billion (approximately 16.3% of GDP), an increase of 4.3% as compared to revenues of Ps. 125,904 billion recorded in 2014. Total tax revenues are expected to grow by 7.8%, from Ps. 108,343 billion in 2014 to Ps. 116,846 billion in 2015. Income tax revenues are expected to amount to Ps. 9,586 billion in 2015, a decrease of 18.5% as compared to 2014 income tax revenues of Ps. 11,763 billion. Internal value-added tax revenues are expected to total Ps. 30,142 billion as compared to Ps. 26,397 billion in 2014, an increase of 14.2%. Withholding tax revenues are expected to amount to Ps. 28,079 billion as compared to Ps. 25,858 billion in 2014, an increase of 8.6%. Revenues from the tax on financial transactions are anticipated to amount to Ps. 7,080 billion, as compared to Ps. 6,442 billion in 2014, representing an increase of 9.9%. Tariffs and external value-added tax revenues are expected to increase by 16.1% in 2015, from Ps. 16,340 billion in 2014 to Ps. 18,970 billion in 2015. Non-tax revenues are expected to amount to Ps. 14,469 billion in 2015, a 17.6% decrease as compared to 2014 (Ps. 17,562 billion). Tax revenues are expected to grow mainly as a result of the entry into force of Law 1739 of 2014, which was approved by Congress on December 2014 and the tax collection which tax base are 2014 profits.
According to CONFIS, Central Government expenditures (net of amortizations of public debt and on a cash-flow basis) under the 2015 budget are expected to total Ps. 155,197 billion (approximately 19.2% of GDP) as compared to Ps. 144,260 billion in 2014, representing an increase of 7.6%. Operational expenditures are expected to total Ps. 113,574 billion in 2015, an increase of 8.2% as compared to Ps. 104,969 billion registered in 2014. Expenditures for interest payments are expected to increase by 23%, from Ps. 16,979billion in 2014 to Ps. 20,885 billion in 2015. Investment expenditures are expected to amount to Ps. 20,723 billion in 2015, a decrease of 7.2% as compared to Ps. 22,323 billion in 2014. Transfers, including pension transfers and transfers to regional governments, are expected to increase by 8.2%, from Ps. 81,514 billion in 2014 to Ps. 88,205 billion in 2015.
The 2015 budget is based on the following principal budget assumptions:
Principal 2015 Budget Assumptions
| 2015 Budget Assumptions as of June 2015(1) |
||||
| Gross Domestic Product |
||||
| Nominal GDP (billions of pesos) |
806.87 | |||
| Real GDP Growth |
3.6 | % | ||
| Inflation(2) |
||||
| Domestic Inflation (consumer price index) |
4.0 | % | ||
| External Inflation(3) |
0.5 | % | ||
| Real Devaluation at end of period |
20.6 | % | ||
| Export Prices |
||||
| Coffee (ex-dock) ($/lb.) (4) |
1.8 | |||
| Oil ($/barrel) (5) |
48.0 | |||
| Coal ($/ton) (6) |
61.6 | |||
| Gold ($/Troy oz.) (4) |
1,200.0 | |||
| 1: | Figures correspond to statistics released by the General Directorate of Macroeconomic Policy in June 2015 in connection with the release of the Medium Term Fiscal Plan 2015. |
| 2: | End of period. |
| 3: | “External Inflation” is based on projected inflation in the United States as published in the IMF, World Economic Outlook Database, April 2015. |
| 4: | Budget assumptions based on Banco de la República data. |
| 5: | Based on inputs provided by the Mining and Energy Technical Group established by the Fiscal Rule and oil futures market. Projections include an average price of Brent oil of $60 per barrel. |
| 6: | Based on projections by the General Directorate of Macroeconomic Policy. |
| Sources: | General Directorate of Macroeconomic Policy, Ministry of Finance. |
The figures set forth above represent the Government’s forecast, as of June 15, 2015, of the 2015 Colombian economy. While the Government believes that these assumptions and targets were reasonable when made, some are beyond the control or significant influence of the Government, and actual outcomes will depend on future events. Accordingly, no assurance can be given that economic results will not differ materially from the figures set forth above.
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The Government has implemented three policies to maintain fiscal responsibility and economic growth: (i) the tax reform law of 2014 (Law 1739 of 2014); (ii) a budgetary postponement of expenses in 2015 of Ps. 5.9 trillion (Decree 0377 of 2015) and (iii) a plan to drive productivity and employment, the Plan de Impulso a la Prosperidad y el Empleo - PIPE 2.0, which has as its objective to contribute to economic growth promoting investment in infrastructure, energy and the mining sector and increasing the competitiveness of industry, tourism and the agriculture. The resources the Government will allocate for PIPE 2.0 have been reallocated from the budget, and such reallocation complies with the limits of the fiscal responsibility law.
IMF Program
Flexible Credit Line with IMF
On March 26, 2009, the IMF made available to Colombia the IMF’s Flexible Credit Line, a short-term facility intended to provide contingent liquidity to countries with sound macroeconomic policies and institutional frameworks. The Flexible Credit Line was designed to help Colombia during the global financial crisis by providing the flexibility to draw on the credit line at any time. Disbursements under the Flexible Credit Line were not phased or conditioned on compliance with policy targets as in traditional IMF-supported programs. On April 20, 2009, the Government made an official application for $10.4 billion under the Flexible Credit Line to the IMF. On May 11, 2009 the IMF’s Executive Board approved a one-year arrangement under the Flexible Credit Line for $10.5 billion. On May 7, 2010, the IMF’s Executive Board approved a successor one-year arrangement under the Flexible Credit Line for $3.5 billion. On May 9, 2011, the IMF’s Executive Board approved a two-year $6.2 billion successor arrangement under the IMF’s Flexible Credit Line. On June 24, 2013, the IMF’s Executive Board approved a two-year SDR 3.87 billion successor arrangement under the Flexible Credit Line, which at June 24, 2013 was equivalent to approximately $5.84 billion. On June 17, 2015, the IMF’s executive board approved a two-year SDR 3.87 billion successor arrangement under the IMF’s Flexible Credit Line, which at June 17, 2015 was equivalent to approximately $5.45 billion. To date, Colombia has not drawn on the Flexible Credit Line. The Government intends to treat the credit line as precautionary and does not plan to draw on the facility.
Recently Enacted Fiscal Reforms
Since 2010, the Santos administration submitted to Congress, and Congress approved, a package of structural reforms aimed at improving the conditions for the sustainability of public finances in the long term and imposing targets in several indicators of fiscal performance. The reforms are described below.
Health System Reforms: On July 12, 2010, a law that seeks to increase the resources available for the health system by between Ps. 3.5 and Ps. 3.6 trillion was enacted. The principal provisions of the law are as follows: (i) an increase in value added tax rates for beer, cigars, gambling and liquor; (ii) the authorization to use transfers from the Government to the departments and municipalities to equalize the benefits under Plan Obligatorio de Salud and Plan Obligatorio de Salud Subsidiado; and (iii) implementation of measures that are intended to reduce evasion and avoidance of the required contributions to the health system.
On January 19, 2011, the president signed into law the Health Reform Law that provides more resources to the health system (Ps.1.5 trillion per year). The Government will contribute Ps.1.0 trillion per year from the national budget and other resources are expected to come from the Family Compensation Funds (a non-governmental agency that pays social security subsidies), municipalities and departments, among others. The law will also order periodic updates to the public health insurance plans in order to make them consistent with the epidemiological profile of the population, limiting and rationalizing the type of treatments and drugs that are included in the insurance plans.
Fiscal Sustainability Reform: On June 8, 2011, Congress passed the constitutional reform of Fiscal Sustainability. The main effect of this reform is the protection of the fundamental economic, social and cultural rights embodied in the Constitution, establishing fiscal sustainability as a criterion and requiring the different branches of government to consider the implications of their decisions on macroeconomic stability.
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Royalties Reform: On June 9, 2011, Congress approved the reform to the royalties system (called “Acto Legislativo de Reforma a las Regalías”). The main objective of this reform is to redistribute more equitably royalties received from the exploitation of natural resources among all the regions of Colombia, generate savings, promote transparent management by authorities and strengthen regional competitiveness. The reform requires that 40% of the royalties generated by the exploitation of natural resources be used to finance social, economic and environmental development projects in the regions based on objective criteria such as the size of the population and level of poverty.
Fiscal Responsibility Law: On June 14, 2011, Congress approved the fiscal responsibility law. The main objective of this reform is to reduce gradually the structural fiscal deficit of the Central Government to 2.3% of GDP or less by 2014, 1.9% of GDP or less by 2018 and 1.0% of GDP or less by 2022. The fiscal responsibility law states that, in the long term, structural spending cannot exceed structural revenue by more than 1%, which is aimed at reducing the Central Government debt to GDP ratio to below 20%.
Infrastructure Law: On November 22, 2013, a law on infrastructure was passed. The main purpose of the law is to establish a regulatory framework and provide tools for improving the country’s transportation infrastructure. It seeks to make the approval and execution process for transportation infrastructure more efficient and expeditious through structures that will support and facilitate the development of a modern transport network for the country.
On December 23, 2014, following approval by Congress, President Santos signed a tax reform bill into law (Law 1739 of 2014). The law seeks to maintain the growth of the Colombian economy through infrastructure development and social programs and strike a balance between taxes on wealth and income without adversely affecting the middle class or small and medium size companies. See “Republic of Colombia — Other Domestic Initiatives” for additional information on the tax reform law.
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PUBLIC SECTOR DEBT
General
Public sector debt (“public debt”) in Colombia is comprised of the internal and external debt of the Central Government, Banco de la República and state-owned non-financial companies, as well as the external debt of state-owned financial institutions and departmental and municipal governments. External public debt encompasses all debt payable in currencies other than pesos (including debt denominated in pesos but payable in currencies other than pesos), while internal public debt includes all debt payable in pesos.
The type of authorization required for incurring public debt depends on the use of the proceeds and on whether the debt is issued directly or guaranteed by the Republic, or is issued by a public entity without the benefit of the Republic’s guarantee. The Ministry of Finance is the Government agency responsible for regulating public sector borrowing. The Ministry of Finance must authorize all external borrowing by government-owned corporations and national, departmental and municipal agencies.
New external debt issued or guaranteed by the Republic must comply with the global debt ceiling set periodically by Congress. This ceiling is set as part of the external financing program proposed by the executive branch. In addition, external public debt issued or guaranteed by the Republic that increases the amount of outstanding external debt issued or guaranteed by the Republic must be authorized by the Board of Directors of Banco de la República, the Consejo Nacional de Política Económica y Social (“CONPES”) and the Comisión Interparlamentaria de Crédito Público (Public Credit Congressional Commission), a special six-member Congressional committee. The Director General of Public Credit and National Treasury of the Ministry of Finance must give advance approval of external debt issuances by the Republic that will be used to prepay or refinance existing debt. External debt incurred by decentralized entities requires prior authorization by the Ministry of Finance.
Until 1990, loans from Banco de la República and proceeds from special purpose bonds were the primary source of the Government’s internal public debt. Pursuant to Law 51 of 1990, the Government initiated a program in 1991 to finance public sector internal debt with Treasury bond issuances in the domestic capital markets, thereby diminishing reliance upon the traditional sources of internal financing. Colombia’s external public debt consists of loans from multilateral institutions (such as the World Bank and the IADB), foreign governments, commercial banks, suppliers, export credit institutions and bonds.
The focus of the Government’s debt management is to diversify the Government’s sources of financing, issue bonds in the European, Asian and U.S. capital markets, reduce the public sector deficit by improving the maturity profile of public sector debt and lower debt service costs and currency risk exposure. In addition, the Republic has guaranteed less debt due to privatizations and stricter policies for authorizing guaranteed debt.
On June 18, 2014, the Directorate General of Macroeconomic Policy announced a revised Financing Plan for 2014 under which the Government planned to issue up to Ps. 33.19 trillion in internal debt and $4.04 billion in external debt for 2014. On the same date, the Directorate General of Macroeconomic Policy announced the Financing Plan for 2015, which contemplated up to Ps. 34.5 trillion in internal debt and $5.1 billion in external debt for 2015. On May 12, 2015, the Government published the results of the Financing Plan for 2014. In 2014, the Government issued Ps. 34.5 trillion in internal debt and $5.15 billion in external debt for 2014. In June 2015, the Medium Term Fiscal Framework stated that the Central Government deficit for 2014 was 2.4% of GDP, and that the non-financial public sector deficit for 2014 was 1.8%. On June 12, 2015, the Financing Plan for 2015 was adjusted to contemplate up to Ps. 30.57 trillion in internal debt and $5.08 up to billion in external debt for 2015.
Colombia’s ratio of total net non-financial public sector debt to GDP was at 35.6% in 2010, decreased to 34.1% in 2011 and increased to 32.6% in 2012 and to 34.6% in 2013. For the year ended December 31, 2014, the ratio of total net non-financial public sector debt to GDP increased to 38.3%, mainly due to the increase in debt of the Central Government.
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Public Sector Internal Debt
In 2014, the Government’s internal debt consisted mainly of the following debt instruments:
| • | Treasury bonds known as Títulos de Tesorería (“TES”) sold, through auctions, to the public and to Government agencies (which are obligated to invest excess funds in these Government instruments); and |
| • | Various special-purpose bond issues. |
The Central Government’s internal funded debt (i.e., long-term debt with an original maturity of more than one year) was $88.8 billion (Ps.212.5 trillion) on December 31, 2014, a decrease of 12.3% in dollar terms (a 8.9% increase in Peso terms) from the $101.3 billion (Ps.195.2 trillion) outstanding on December 31, 2013. According to preliminary figures, total non-financial public sector internal funded debt was $102.4 billion (Ps. 244.9 trillion) on December 31, 2014, as compared to the $117.8 billion (Ps. 227.0 trillion) outstanding on December 31, 2013.
TES issuances in the domestic capital markets have become a significant source of Central Government funding. As of December 31, 2014, local TES bonds represented 66.5% of total Central Government debt (both internal and external) and 96.4% of total internal Central Government debt. TES issuances in the domestic capital markets are accounted for as internal debt, while global TES bond issuances, which are denominated in pesos but payable in dollars and offered and sold globally (in foreign capital markets), are accounted for as external debt.
In January 2003, the Government appointed 20 financial institutions as market makers in Government securities as part of its strategy to broaden the Treasury bond market and provide liquidity to the local capital markets. Furthermore, the Ministry of Finance has expanded the types and maturities of its bond issues. In addition to one-, two-, three- and five-year fixed-rate TES, beginning in March 1998 the Government issued three-, five-, seven- and ten-year TES, with interest rates pegged to changes in the consumer price index. To reduce interest rate pressures on the market and simultaneously offer an exchange rate hedging instrument, the Government has issued dollar-linked one-, two- and three-year TES. As of December 31, 2014 there were no dollar-linked TES outstanding. In May 1999, the Government introduced inflation-indexed TES, known as UVR (Unidad de Valor Real Constante) and since then has issued five-, seven-, ten-, twelve- seventeen- and twenty year UVR TES bonds. With the UVR, the principal amount of the bond (rather than the interest rate) changes according to movements in the consumer price index, in a manner similar to the inflation- adjusted government debt securities available in the United States and France. As of December 31, 2014, $20.8 billion (Ps. 49.7 trillion) of UVR TES bonds were outstanding.
In 2010, the Government issued short-term (357-day) bills and four-, seven- and sixteen-year fixed rate TES and six-, eight- and seventeen-year UVR TES bonds. In 2011, the Government issued short-term (357-day) bills and four-, six-, seven-, ten-, eleven-, fifteen- and sixteen- year fixed rate TES and , eight-, twelve- and seventeen-year UVR TES bonds. In 2012, the Government issued seven, ten, eleven and fifteen year fixed rate TES and eight-, ten-, twelve- and seventeen-year UVR TES bonds. In 2013, the Government issued six-, seven-, ten- and sixteen-year fixed rate TES and eight-, ten- and twenty-year UVR TES bonds. In 2014, the Government issued five-, ten- and fifteen-year fixed rate TES benchmarks and five-, seven- and nineteen UVR TES bonds
The Government has taken additional measures during the last several years to strengthen the domestic capital markets. For example, the Government encourages electronic systems for trading public sector debt instruments. These systems should provide a more efficient pricing mechanism and greater liquidity for investors. The Government also encourages the participation of institutional investors in the capital markets, as evidenced by the increasing investment of private pension fund assets in new capital market instruments. The Government has also increased its consistency in the timing and amounts of TES issuances. In addition to these measures, the Government issued Peace Bonds in the aggregate principal amount of Ps. 0.7 billion in 2007. The Peace bonds fund agrarian reform and the reconstruction of social infrastructure in conflict zones. In 2010 and 2011, the Government issued Ps. 1.1 billion and Ps. 0.9 billion in aggregate principal amount of Peace Bonds, respectively. In 2012, the Government issued Ps. 0.2 billion in aggregate principal amount of Peace Bonds, and in 2013, the Government issued Ps. 748 million in aggregate principal amount of Peace Bonds. In 2014, the Government issued Peace Bonds in an aggregate principal amount of Ps. 99.3 million.
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In 2014, the Government issued Ps. 34.5 trillion of TES bonds. Of this amount, 57.4% was issued through auctions. In 2015, the Government plans to issue Ps. 30.5 trillion of TES bonds. It is expected that 74.1% of this amount will be issued through auctions. As of July 24, 2015 79% of the planned aggregate principal amount of TES bond issuances has been issued. Auctions of TES bonds are normally held on a weekly basis, alternating between TES bonds and UVR TES bonds each week.
On May 16, 2012, the Government developed a new strategy for the issuance of internal funded debt. The plan involves the issuance of benchmark peso-linked TES bonds and UVR TES bonds every two years, both launched at the same time in odd years, with a reopening of such securities when 5 years remain until maturity. Securities are expected to be issued for the maximum term established for each security (15 years in the case of TES bonds denominated in pesos and 20 years in the case of UVR bonds), where the maturity of peso-linked TES will occur in even years and the maturity of UVR TES bonds occur in odd years. This measure is taken with the objective of reducing the refinancing risk.
The following table shows the total internal funded debt of the public sector.
Public Sector Internal Funded Debt(1)
| 2010 | 2011 | 2012 | 2013 | 2014 | ||||||||||||||||
| (billions of pesos or percentage of GDP) | ||||||||||||||||||||
| Central Government(2) |
Ps. | 151,489 | Ps. | 162,494 | Ps. | 170,561 | Ps. | 195,152 | Ps. | 212,462 | ||||||||||
| Public Sector Entities |
31,830 | 29,611 | 29,962 | 31,880 | 32,470 | |||||||||||||||
| Total Internal Debt(3) |
Ps. | 183,319 | Ps. | 192,105 | Ps. | 200,522 | Ps. | 227,032 | Ps. | 244,933 | ||||||||||
| As a Percentage of GDP |
33.6 | % | 31 | % | 30.2 | % | 32 | % | 32.4 | % | ||||||||||
Totals may differ due to rounding.
| 1: | Includes debt of the Government with an original maturity of more than one year, and public sector entities’ guaranteed internal debt. |
| 2: | Central Government figures exclude pension bonds and constant value bonds. |
| 3: | Includes peso-denominated debt of the Government excluding state-owned financial institutions. |
| Sources: | General Directorate of Public Credit and National Treasury, Ministry of Finance; CONFIS. |
At December 31, 2014 there was no direct internal floating debt (i.e., short-term debt with an original maturity of one year or less) of the Central Government.
Public Sector External Debt
As used herein, public sector external funded debt consists of long-term external debt of the Central Government and guaranteed and non-guaranteed long-term external debt of public sector agencies, departments and municipal governments and state-owned financial institutions. Long-term debt means debt with an original maturity of more than one year. Traditionally, Colombia has relied on the following six sources of external debt:
| • | capital markets, such as external bond offerings; |
| • | multilateral financial institutions, such as the IADB, the World Bank and CAF; |
| • | commercial banks; |
| • | export credit institutions; |
| • | suppliers; and |
| • | bilateral agreements. |
As of December 31, 2014, debt from multilateral institutions and export credit institutions represented 33.7% of public sector external funded debt, while loans from commercial banks constituted 6.8% of the total. The amount of bonds outstanding as of December 31, 2014 was $33.3 billion, or 57.7% of public sector external funded debt. Total public sector external funded debt increased from $50.6 billion on December 31, 2013 to $57.8 billion on December 31, 2014.
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As of December 31, 2014, floating (i.e., short-term debt with an original maturity of one year or less) public sector external debt totaled $0.7 billion.
On December 31, 2014, the Central Government accounted for 64.9% of public sector external funded debt and state-owned entities, including Banco de la República, accounted for 35.1%.
The following table shows the external funded debt of the public sector by type.
Public Sector External Funded Debt by Type(l)(2)
| As of December 31, | ||||||||||||||||||||
| 2010 | 2011 | 2012 | 2013 | 2014 | ||||||||||||||||
| (millions of U.S. dollars, except percentages) | ||||||||||||||||||||
| Central Government |
$ | 30,987 | $ | 32,934 | $ | 33,661 | $ | 35,658 | $ | 37,530 | ||||||||||
| Public Entities(3) |
||||||||||||||||||||
| Guaranteed |
1,897 | 1,896 | 1,957 | 1,871 | 1,656 | |||||||||||||||
| Non-guaranteed |
5,369 | 5,775 | 8,877 | 13,093 | 18,648 | |||||||||||||||
| Total External Debt |
$ | 38,253 | $ | 40,606 | $ | 44,496 | $ | 50,623 | $ | 57,835 | ||||||||||
| Total Debt Service |
$ | 4,673 | $ | 6,213 | $ | 5,828 | $ | 4,306 | $ | 5,498 | ||||||||||
| External Debt/GDP |
14.0 | % | 14.9 | % | 11.3 | % | 13.4 | % | 15.3 | % | ||||||||||
| Total Debt Service/GDP |
1.7 | 2.3 | 1.5 | 1.1 | 1.5 | % | ||||||||||||||
| Total Debt Service/Exports |
14.2 | 18.9 | 9.7 | 7.3 | 9.3 | % | ||||||||||||||
Totals may differ due to rounding.
| 1: | Debt with an original maturity of more than one year. |
| 2: | Debt in currencies other than U.S. dollars has been converted into U.S. dollars using exchange rates as of December 31 of each year. |
| 3: | Includes Banco de la República, public agencies and entities, departments and municipal governments and state-owned financial entities. |
| Source: | Debt Database—Ministry of Finance. |
As of December 31, 2010, 2011, 2012, 2013 and 2014, Colombia’s public sector external funded debt increased by $2.7 billion, $2.4 billion, $3.9 billion, $6.1 billion and $7.2 billion, respectively, from the corresponding figure on December 31 of the prior year. The increase in the public external funded debt in 2014 was primarily due to an increase in indebtedness of public entities. Public sector external debt as a percentage of GDP increased from 14.0% on December 31, 2010 to 14.9% on December 31, 2011. It then decreased to 11.3% on December 31, 2012, but increased to 13.4% on December 31, 2013. As of December 31, 2014, public sector external debt as a percentage of GDP increased to 15.3%. External debt service as a percentage of GDP increased from 1.7% on December 31, 2010 to 2.3% on December 31, 2011, but decreased to 1.5% on December 31, 2012, 1.1% on December 31, 2013 and 1.5% on December 31, 2014. As of December 31, 2014, Colombia’s public sector external funded debt totaled $57.8 billion, of which $37.5 billion was debt of the Central Government and $20.3 billion was debt of other public entities.
The Government’s external debt management strategy is comprised of several elements, including:
| • | diversifying the Government’s sources of funding in order to reduce its vulnerability to external market disruptions; |
| • | focusing on multilateral sources of funding, in order to finance social infrastructure projects that involve private sector investment; and |
| • | minimizing interest and exchange rate risks associated with debt service through the use of derivatives. |
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On June 17, 2015, the IMF’s executive board approved a two-year SDR 3.87 billion successor arrangement under the IMF’s Flexible Credit Line, which as of June 17, 2015 was equivalent to approximately $5.45 billion. See “Public Sector Finance—Flexible Credit Line with IMF.”
On January 28, 2015, Colombia issued $1,500,000,000 aggregate principal amount of its 5.000% Global Bonds due 2045. On March 26, 2015, Colombia issued an additional $1,000,000,000 aggregate principal amount of its 5.000% Global Bonds due 2045 in a reopening.
As part of Colombia’s external liability management program, the Government has conducted and plans to continue to conduct liability management transactions in order to reduce exposure to exchange rate risks and refinancing risks.
The following table shows the external funded debt of the public sector by creditor.
Public Sector External Funded Debt by Creditor(1)(2)
| As of December 31, | ||||||||||||||||||||
| 2010 | 2011 | 2012 | 2013 | 2014 | ||||||||||||||||
| (millions of U.S. dollars) | ||||||||||||||||||||
| Multilaterals |
||||||||||||||||||||
| IADB |
$ | 6,492 | $ | 6,826 | $ | 6,894 | $ | 7,233 | 7,258 | |||||||||||
| World Bank |
7,556 | 7,624 | 7,851 | 7,938 | 8,215 | |||||||||||||||
| Others |
1,470 | 1,566 | 1,439 | 1,284 | 1,125 | |||||||||||||||
| Total Multilaterals |
15,518 | 16,016 | 16,183 | 16,455 | 16,598 | |||||||||||||||
| Commercial Banks |
824 | 1,149 | 2,061 | 2,775 | 3,908 | |||||||||||||||
| Export Credit Institutions |
114 | 97 | 2,137 | 2,687 | 2,864 | |||||||||||||||
| Bonds |
20,108 | 22,023 | 23,597 | 27,983 | 33,343 | |||||||||||||||
| Foreign Governments |
1,673 | 1,308 | 510 | 717 | 1,121 | |||||||||||||||
| Suppliers |
16 | 12 | 7 | 5 | 3 | |||||||||||||||
| Total |
$ | 38,253 | $ | 40,606 | $ | 44,496 | $ | 50,623 | 57,835 | |||||||||||
Totals may differ due to rounding.
| 1: | Debt with an original maturity of more than one year. |
| 2: | Debt in currencies other than U.S. dollars has been converted into U.S. dollars using exchange rates as of December 31 of each year. |
| Source: | Debt Database—Ministry of Finance. |
IADB Loans
Colombia uses loans from the IADB to finance public investment. Disbursements of loans from the IADB totaled approximately $327.5 million in 2010, $134.8 million in 2011, $83.2 million in 2012, $24.1 million in 2013 and $35.7 million in 2014.
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The following table shows the external funded debt of the public sector by currency.
Public Sector External Funded Debt by Currency
| As of December 31, 2014(1) | ||||||||||||||||||||
| Central Government |
Guaranteed | Non–Guaranteed | Total | Percentage of Total |
||||||||||||||||
| (millions of U.S. dollars) | ||||||||||||||||||||
| U.S. Dollars |
$ | 33,153 | $ | 1,056 | $ | 16,566 | $ | 50,774 | 87.8 | % | ||||||||||
| Colombian Pesos |
3,862 | 575 | 2,081 | 6,517 | 11.3 | % | ||||||||||||||
| Japanese Yen |
375 | 0 | 0 | 375 | 0.6 | % | ||||||||||||||
| Euros |
87 | 21 | 1 | 110 | 0.2 | % | ||||||||||||||
| Others |
53 | 5 | 0 | 58 | 0.1 | % | ||||||||||||||
| Total |
$ | 37,530 | $ | 1,656 | $ | 18,648 | $ | 57,835 | 100.00 | % | ||||||||||
|
|
|
|||||||||||||||||||
Totals may differ due to rounding.
| 1: | Preliminary. Debt with an original maturity of more than one year. Debt in currencies other than U.S. dollars has been converted into U.S. dollars using exchange rates as of December 31, 2014. |
| Source: | Debt Database—Ministry of Finance. |
The following table sets forth the amortization schedule for principal payments on Colombia’s public sector external debt outstanding on December 31, 2014.
Public Sector External Debt Amortization Schedule(1)(2)
Loans and Bonds
| Debt Outstanding December 31, 2014 (3) |
||||||||||||||||||||||||
| 2015 | 2016 | 2017 | 2018 | After | ||||||||||||||||||||
| (millions of U.S. dollars) | ||||||||||||||||||||||||
| Multilaterals |
||||||||||||||||||||||||
| IADB(3) |
$ | 550 | $ | 452 | $ | 479 | $ | 501 | $ | 504 | $ | 7,582 | ||||||||||||
| World Bank(3) |
736 | 635 | 583 | 472 | 458 | 9,046 | ||||||||||||||||||
| Others |
163 | 139 | 145 | 140 | 113 | 713 | ||||||||||||||||||
| Total Multilaterals |
1,449 | 1,227 | 1,207 | 1,113 | 1,074 | 17,341 | ||||||||||||||||||
| Commercial Banks |
926 | 243 | 448 | 261 | 330 | 6,599 | ||||||||||||||||||
| Export Credit Institutions |
120 | 237 | 220 | 182 | 237 | 2,495 | ||||||||||||||||||
| Bonds |
1,086 | 1,150 | 92 | 1,960 | 350 | 35,496 | ||||||||||||||||||
| Foreign Governments |
133 | 5 | 19 | 27 | 27 | 354 | ||||||||||||||||||
| Suppliers |
1 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||
| Total External Debt |
$ | 2,265 | $ | 1,635 | $ | 779 | $ | 2,430 | $ | 944 | $ | 44,944 | ||||||||||||
Totals may differ due to rounding.
| 1: | Debt with original maturity of more than one year. Amortization figures in this table include both scheduled payments on outstanding debt and projected payments on debt not yet disbursed but for which commitments have been made and are planned to be disbursed. |
| 2: | Debt in currencies other than U.S. dollars has been converted into U.S. dollars using exchange rates as of December 31, 2014. |
| 3: | Amortization payments to the IADB and World Bank have been re-expressed using a revaluation factor based on the basket of currencies in which those debts are denominated on the dates their respective transactions closed. |
| Source: | Debt Database—Ministry of Finance. |
Debt Record
Colombia has regularly met all principal and interest obligations on its external debt for over 80 years.
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TABLES AND SUPPLEMENTARY INFORMATION
Public Debt of the Republic of Colombia
External Public Debt
Direct Funded Debt (1)
Bond Issues
| Interest Rate and Title | Year of Issue |
Year of Final Maturity |
Currency | Principal Amount Disbursed (millions of original currency) |
Principal Amount Outstanding at Dec. 31, 2014(2) (millions of U.S. dollars) |
|||||||||||||
| Central Government |
||||||||||||||||||
| 8.700% Notes Due 2016 |
1996 | 2016 | USD | $ | 200 | 76 | ||||||||||||
| (*) 8.375% Notes Due 2027 |
1997 | 2027 | USD | $ | 250 | 74 | ||||||||||||
| 11.85% Global Bonds due 2028 |
2000 | 2028 | USD | $ | 500 | 9 | ||||||||||||
| (*)11.75% Global Bonds due 2020 |
2000 | 2020 | USD | $ | 1,075 | 796 | ||||||||||||
| (*)10.375% Global Bonds due 2033 |
2003 | 2033 | USD | $ | 635 | 341 | ||||||||||||
| (*)8.125% Global Bonds due 2024 |
2004 | 2024 | USD | $ | 1,000 | 1,000 | ||||||||||||
| 8.66% Notes Due 2016 |
2004 | 2016 | USD | $ | 17 | 17 | ||||||||||||
| (*)12.000% Global TES Bonds due 2015(2) |
2005 | 2015 | COP | Ps. | 2,580,037 | 1,078 | ||||||||||||
| 3 mo. Libor +180 bps Notes due 2015 |
2005 | 2015 | USD | $ | 400 | 169 | ||||||||||||
| (*)7.375% Notes due 2017 |
2006 | 2017 | USD | $ | 1,650 | 1,650 | ||||||||||||
| (*)7.375% Notes due 2037 |
2006 | 2037 | USD | $ | 1,818 | 1,818 | ||||||||||||
| 9.85% Global TES Bonds due 2027(2) |
2007 | 2027 | COP | Ps. | 1,924,515 | 804 | ||||||||||||
| 7.375% Notes due 2019 |
2009 | 2019 | USD | $ | 2,000 | 2,000 | ||||||||||||
| (*)6.125% Global Bonds due 2041 |
2009 | 2041 | USD | $ | 1,000 | 2,500 | ||||||||||||
| 2.42% Notes due 2019(2) |
2009 | 2019 | JPY | ¥ | 45,000 | 376 | ||||||||||||
| (*)7.75% Global TES Bonds due 2021(2) |
2010 | 2021 | COP | Ps. | 2,467,611 | 1,281 | ||||||||||||
| 4.375% Global Bonds due 2021 |
2011 | 2021 | USD | $ | 2,000 | 2,000 | ||||||||||||
| 4.375% Global TES Bond Due 2023(2) |
2012 | 2023 | COP | Ps. | 1,000,000 | 417 | ||||||||||||
| 2.625% Global Bonds Due 2023 |
2013 | 2023 | USD | 1,000 | 1,000 | |||||||||||||
| (*)4.000% Global Bonds Due 2024 |
2013 | 2024 | USD | 2,100 | 2,100 | |||||||||||||
| (*)5.625% Global Bonds Due 2044 |
2014 | 2044 | USD | 2,500 | 2,500 | |||||||||||||
| Total |
$ | 22,006 | ||||||||||||||||
| 1: | Includes only medium- and long-term funded debt (i.e., debt with an original maturity of more than one year). As of December 31, 2014. |
| 2: | Principal amount outstanding on December 31, 2014 was converted to U.S. dollars at the corresponding exchange rate on December 31, 2014. COP/USD = Ps. 2,392.46/$1.00; JPY/USD = ¥119.78/$1.00; USD/EUR = $1.2098/€1.00. |
| (*) | Includes reopenings. |
| Source: | Debt Database—Ministry of Finance. |
Loans from Multilateral Institutions
| Lender | Interest Rate | Currency | Principal Amount Outstanding as of December 31, 2014 |
|||||
| (millions of U.S. dollars) |
||||||||
| World Bank |
Various | Various | $ | 7,798 | ||||
| IADB |
Various | Various | 6,255 | |||||
| Others |
Various | Various | 897 | |||||
| Total |
$ | 14,950 | ||||||
|
|
|
|||||||
Totals may differ due to rounding.
| Source: | Debt Database—Ministry of Finance. |
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Loans from Banks(1)
| Title |
Interest Rate |
Date of Agreement |
Year of Final Maturity |
Currency | Principal Amount Disbursed |
Principal Amount Outstanding as of December 31, 2014 |
||||||||
| (millions of U.S. dollars) | ||||||||||||||
| Commercial Bank Loans |
Various | Various | Various | Various | n.a. | 4 | ||||||||
| Export Credits |
2%-7.75% | Various | Various | USD, EUR | n.a. | 119 | ||||||||
| Governments |
0%-4.83% | Various | Various | USD, EUR, CNY | n.a. | 701 | ||||||||
| Total |
$ | 824 | ||||||||||||
|
|
|
|||||||||||||
|
n.a. = Not available.
Totals may differ due to rounding.
1: Medium- and long-term indebtedness.
Source: Debt Database—Ministry of Finance. |
||||||||||||||
| Total Outstanding Long-Term Direct External Debt |
$ | 37,530 | ||||||||||||
|
|
|
|||||||||||||
Other External Public Sector Debt
Guaranteed Debt and Non-guaranteed Debt
| Borrower | Guaranteed Debt(1)(2) |
Non-guaranteed Debt | Principal Amount Outstanding as of December 31, 2014 |
|||||||||
| millions of U.S. dollars | ||||||||||||
| Non-Financial Public Sector: |
||||||||||||
| AGUAS DEL MAGDALENA |
$ | 15 | $ | 0 | $ | 15 | ||||||
| AGUAS Y AGUAS DE PEREIRA |
15 | 0 | 15 | |||||||||
| BOGOTA DISTRITO CAPITAL |
170 | 355 | 525 | |||||||||
| C.A.R. |
7 | 0 | 7 | |||||||||
| DEPARTAMENTO DE ANTIOQUIA |
72 | 50 | 122 | |||||||||
| DEPARTAMENTO DE CESAR |
9 | 0 | 9 | |||||||||
| DEPARTAMENTO DE CUNDINAMARCA |
13 | 0 | 13 | |||||||||
| DISTRITO TUR/CUL DE CARTAGENA |
21 | 0 | 21 | |||||||||
| E.E.E.B- E.S.P |
0 | 828 | 828 | |||||||||
| E.P.M. E.S.P. |
339 | 2.160 | 2.500 | |||||||||
| E.T.BARRANQUILLA |
0 | 6 | 6 | |||||||||
| E.T.M.V.A.METRO |
43 | 0 | 43 | |||||||||
| ECOPETROL |
0 | 7.565 | 7.565 | |||||||||
| EMCALI |
5 | 0 | 5 | |||||||||
| I.S.A. |
0 | 33 | 33 | |||||||||
| ISAGEN S.A. |
166 | 106 | 272 | |||||||||
| MUNICIPIO DE CALI |
3 | 0 | 3 | |||||||||
| MUNICIPIO DE MEDELLIN |
3 | 250 | 253 | |||||||||
| I.D.E.A |
0 | 8 | 8 | |||||||||
| PROPILCO S.A. |
0 | 17 | 17 | |||||||||
| REFICAR |
0 | 5.088 | 5.088 | |||||||||
| DEPARTAMENTO DE GUAJIRA |
24 | 0 | 24 | |||||||||
| ESP GECELCA S.A. ESP. |
0 | 93 | 93 | |||||||||
| EMPOPASTO S.A. ESP |
16 | 0 | 16 | |||||||||
| E.T.B. |
0 | 222 | 222 | |||||||||
| TGI S.A. ESP |
0 | 851 | 851 | |||||||||
| OLEDUCTO CENTRAL S.A. |
0 | 500 | 500 | |||||||||
| Total Non-Financial Public Sector: |
1.176 | 18.133 | 19.308 | |||||||||
| Financial Public Sector: |
||||||||||||
| BANCOLDEX |
281 | 70 | 351 | |||||||||
| FINDETER |
200 | 445 | 645 | |||||||||
| Total Financial Public Sector: |
481 | 516 | 996 | |||||||||
| TOTAL: |
$ | 1.656 | $ | 18.648 | $ | 20.305 | ||||||
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Totals may differ due to rounding.
| 1: | Medium- and long-term indebtedness. |
| 2: | Subject to revision |
| Source: | Debt Database—Ministry of Finance. |
Internal Public Debt
Direct Debt(1)
Bond Issues and Banco de la República
| Description | Year of Final Maturity |
Interest Rate |
Principal Amount Outstanding as of Dec 31, 2014 |
|||||
| (millions of pesos) | ||||||||
| Treasury Bonds |
Various | Various | Ps. | 172,112,187 | ||||
| Pension Bonds |
Various | Various | 9,901,222 | |||||
| TRD |
Various | Various | 1,825,377 | |||||
| Peace Bonds |
Various | Various | 30,493 | |||||
| Constant Value Bonds |
Various | Various | 1,159,038 | |||||
| Security Bonds |
Various | Various | 328 | |||||
| Other Bonds |
Various | Various | 203,173 | |||||
| Other Assumed Debt |
Various | Various | 393 | |||||
| Other |
Various | Various | 204,266 | |||||
| Treasury Promissory Notes |
Various | Various | 6,263,697 | |||||
| Total |
Ps. | 191,700,443 | ||||||
Totals may differ due to rounding.
| 1: | Total as of December 31, 2014. |
| Source: | Debt Registry Office—General Directorate of Public Credit—Ministry of Finance. |
Internal Public Debt
Guaranteed Debt(1)
| Principal Amount Outstanding as of December 31, 2014 |
||||
| (thousands of U.S. dollars) | ||||
| Cedelca |
41.72 | |||
| Department of Magdalena |
9,418.67 | |||
| Department of Nariño |
1,446.35 | |||
| District of Barranquilla |
22,980.40 | |||
| EMCALI |
304.42 | |||
| Municipality of Aracataca |
78.32 | |||
| Municipality of Cali |
92,066.49 | |||
| Municipality of Fundación |
0.23 | |||
| Municipality of Magangue |
1,980.36 | |||
| Municipality of Plato |
196.07 | |||
| Satena |
16,942.91 | |||
| Total |
145,456.00 | |||
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| 1: | Medium- and long-term indebtedness. As of December 31, 2014, the Republic had no outstanding guarantees of floating public sector internal debt. |
| Source: | Ministry of Finance. |
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