Fitch Highlights Colombia’s Solid Fundamentals

Citing the country’s macro stability, improved growth, disciplined fiscal policies and deft liability management, Fitch affirms Colombia’s foreign currency sovereign IDR at BB+ (stable) and the local currency IDR at BBB minus (stable). However, a less robust monetary and exchange rate policy framework and relatively high fiscal and external solvency ratios are weaknesses. “Colombia also remains vulnerable to external shocks due to limited trade integration, high commodity dependence, and considerable trade exposure to Venezuela,” the agency says. The average inflation rate in Colombia is forecast to reach 6.0% in 2008, below the 7.2% of the BB median, Fitch adds. “Nevertheless, progressive tightening of capital controls as well as the perception that the central bank is pursuing multiple objectives has led to greater exchange rate volatility and hurt inflation expectations in recent months,” the agency adds.