Colombia Seen Underpinned by Growth

S&P has affirmed its BB+ rating on Colombia with a stable outlook. Robust growth has helped boost tax receipts and the general government deficit improved significantly in 2007, to 1.2% from 2.3% in 2006, notes the agency. However, it is expected to fall marginally to 1.5% in 2008 due to higher expenditure and some modest deterioration in the social security balance, says S&P analyst Richard Francis. “Further tax reform could lead to a more rapid improvement in the government’s fiscal prospects. This, in turn, could lead to improved creditworthiness, as the debt burden would decline more quickly than currently expected,” he adds. S&P notes that investment to GDP should reach nearly 28% by year-end 2008.