NEW YORK, Oct 7 (IFR) - A setback in the peace process with the FARC rebel group will not derail Colombia’s fiscal reform agenda, the country’s head of public credit told IFR on Friday.
The market had been bullish on the oil exporting country following a rebound in crude amid expectations that the sovereign would soon reap a peace dividend from the end of Latin America’s longest running civil war.
But the surprise no vote last weekend took investors off guard and raised questions about the government’s ability to get through tax reforms seen as vital to supporting Colombia’s credit standing among rating agencies.
“We need to have everyone sit at the table so that we can have an agreement that is acceptable for all Colombians,” Ana Milena Lopez Rocha, Colombia’s director general of public credit, said on the sidelines of the IMF/World Bank meetings.
“The economic agenda remains as it was before the plebiscite.”
A reform bill aimed at simplifying the tax code and increasing fiscal revenues over the coming years is expected to land in Congress next week.
Lopez said the government made no changes to the bill following the October 2 referendum that rejected President Juan Manuel Santos’s peace proposal.
Colombia is expected to cut its fiscal deficit to 3.3% of GDP in 2017 from 3.9% this year to comply with its fiscal responsibility law.
The tax reform is designed achieve that goal and give investors a long-term view on what taxation will be over the coming years, said Lopez.
To meet its external financing need for 2017, Colombia plans to raise US$3bn from the international capital markets and an additional US$3bn from multilateral agencies.
“We have a fair bit of dollar cash so we don’t have a need to prefinance,” said Lopez. “That said, we always look at markets opportunistically.” (Reporting by Davide Scigliuzzo; Editing by Paul Kilby)