BOGOTA, June 21 (Reuters) - Colombia's current account deficit fell to 5.6 percent of gross domestic product in the first quarter, compared with the 7 percent during the same period last year, the country's central bank said.
The deficit between January and March totaled $3.38 billion, down from the $5.19 billion during the first quarter of 2015, the bank said in a statement late on Monday.
The current account of the balance of payments is a broad measure of transactions between the country and the rest of the world. It encompasses trade, interest payments, dividends, remittances and services like tourism.
The finance ministry and central bank consider the account deficit to be a major vulnerability for Latin America's fourth-largest economy which is also contending with high inflation.
Colombia's policymakers are also grappling with a fall of 17.6 percent in the peso over the last 12 months and low oil prices which have hit national income.
Colombia's central bank board will likely raise the benchmark interest rate by 25 basis points at its meeting on Wednesday, analysts told Reuters last week, the final increase in a nearly year-long tightening cycle.
The fall in the deficit is explained by lower repatriation of funds out of Colombia by multinational firms, the bank said, while high import figures continued to feed it.
Foreign direct investment was up 44.5 percent during the first quarter, to $4.57 billion, compared with the same period last year, principally because of the government's sale of electricity generator Isagen to Canada's Brookfield.
Foreign portfolio investment was down 46.6 percent during the quarter to $2.17 billion. Foreigners invested 65.8 percent of that capital in long-term international bonds and the remaining 34.2 percent in local TES bonds and stocks. (Reporting by Nelson Bocanegra; Writing by Julia Symmes Cobb; Editing by Phil Berlowitz)