Colombia warns oil prices will hurt growth

In Davos Switzerland, Colombian Finance Minister Mauricio Cardenas told the international press that sustained low oil prices are jeopardizing Colombia’s forecasted 2016 economic growth rate of 3.2%. Minister Cardenas attributed Colombia’s strong economic performance to the country’s sound macroeconomic fundamentals, including its low inflation, low budget deficit, and low public debt. He also stressed that Colombia needs to work to lower its fiscal deficit.

Minister Cardenas also officially cut the Colombian government’s oil price forecast from an initial $50 per barrel to just $34.7 per barrel. He warned that this could mean that the Colombian government will need to implement additional austerity measures in order to bring down the country’s deficit. Cardenas also lowered Colombia’s oil production goal, to 944,000 bpd from 955,000 bpd.

El Espectador reported on Minister Cardenas’ comments regarding the much-anticipated tax reform bill. He did not predict when the bill will be given to the Colombian Congress, but the report noted that analysts believe it will happen during the beginning of the second half of the year, and that the bill will go into force a year later.

The Colombian daily also reported on Colombian state-owned oil company Ecopetrol’s decision to cease funding of its $23 million program that provided seed funding for entrepreneurs in oil-producing parts of Colombia. Ecopetrol explained that it had to cut the program because of the collapse in global oil prices.