Category: Colombia

The Andean Development Corporation approved a $150 million credit to Colombia to finance the country’s road infrastructure and regional development program. The program aims to improve the main corridors of Colombia´s road network and to pave 3000 kilometers of secondary roads.

SABMiller, the brewer of Miller Lite and Pilsner Urquell, beat out Heineken to buy Colombia’s Grupo Empresarial Bavaria for $5.6 billion. SABMiller will pay $3.5 billion in stock to Colombia’s Santo Domingo family and $2.1 billion in cash to minority shareholders. The London-based company plans to delist Bavaria from Colombia´s stock market; Bavaria´s $4.5 billion market value is more than double the next largest company in the 30-member benchmark IGBC stock index.

Colombia’s Defense Minister Jorge Uribe resigned a year before the end of his term and will be replaced by President Alvaro Uribe´s legal counsel, Camilo Ospina. Minister Uribe has done much to curb kidnapping and violence in the government´s ongoing war against both left and right-wing paramilitary groups, helping restore business and consumer confidence in Colombia. The government forecasts the $91 billion economy, whose main exports are coffee, coal and oil, will expand about 4 percent this year after growing 4 percent in 2004.

Colombia had a trade surplus of $360 million in the four months through April, up from $45 million a year earlier. Exports surged 36 percent to $6.3 billion. Colombia´s trade surplus in 2004 was $860 million.

Colombia announced the candidacy of its current ambassador to the United States, Luis Alberto Moreno, for the presidency of the Inter-American Development Bank (IADB). The IADB´s assembly of governors will meet July 27 in Washington to elect a replacement for current president Enrique Iglesias, who will step down September 30. Other candidates include Brazilian Joao Sayad and Nicaraguan Mario Alonso.

Colombian pollster Napoleón Franco says President Alvaro Uribe’s approval ratings hit 77% in June. However, his economic policies and attempts to cut unemployment made little impression on potential voters, scoring 37% and 29% respectively. Just under half of respondents say Uribe’s re-election would harm the country and 49% no longer felt that rebel insurgents presented a threat.

Raul Reyes, a spokesman for FARC leftwing rebels, proposed exchanging three kidnapped US defense contractors for two guerrilla leaders jailed in the US. This is the first time the FARC has offered to open direct talks with the US. Washington rejected the offer, saying it does not negotiate with terrorists.

Colombia swapped $583 million of dollar and euro-denominated bonds for new peso debt in a bid to reduce financing costs and stretch out the average life of its obligations. Investors holding bonds worth $1.0 billion offered to take part in the exchange. Colombia’s foreign-currency debt is rated Ba2 by Moody’s and BB by Standard & Poor’s, the second highest level in South America after Chile.

Colombian Finance Minister Alberto Carrasquilla has admitted the obvious: Congress will not approve his “budget flexibilization” legislation. Instead of coming to grips with Colombia’s disastrous public finances, the politicos – with encouragement from President Alvaro Uribe – have focused on approving his reelection laws and a plan to disarm Colombia’s insurgents.

Yet the government had promised the IMF that Congress would approve a plan to reform its inoperable budget process by the end of June. But the politicians have already weakened the mind-numbingly dull law. And while the minutiae of budget procedures are certainly tedious, it is hard to exaggerate the importance of Carrasquilla’s package. With luck, Congress will revisit a strengthened law later this year.

Colombia was once an investment grade country until a financial crisis and a batty new constitution in the late 1990s turned it into one of Latin America’s less impressive credits. Politicians adopted Argentine notions of fiscal responsibility. Colombia now faces years of hard work to get its finances under control. Sound finances are a necessary condition for stable growth, so making the politicians focus on balancing the books would do Colombia a lot more good than reelecting Uribe.

Colombia’s benchmark 10-year peso bond yield declined at a government auction Wednesday to 11.74 percent from 12.1 percent at an auction two weeks ago. The government sold all $107 million of the 10-year, six-year, five-year, three-year and one-year securities it offered. Colombia plans to sell between $900 million and $1.2 billion worth of peso-denominated bonds in the domestic market in the second quarter, after selling $1.4 billion of the securities in the first quarter.

Colombia’s state-run oil company Empresa Colombiana de Petroleos (Ecopetrol) posted a net profit of $373 million for the first quarter, up 39 percent year-on-year. Revenues grew 16 percent to $1.74 billion. Ecopetrol is aiming to boost oil exploration in Colombia and has promised to award new concessions in order to increase output. Most of the company’s oil fields are located in Magdalena province in northern Colombia.