major macro economic indicators
|GDP growth (%)||4.8||4.3||3.0||1.8||2.3|
|Inflation (yearly average) (%)||2.0||2,8||4.9||7.6||4.1|
|Budget balance (% GDP)||-0.8||-1.7||-3.4||-3.9||-3.3|
|Current account balance (% GDP)||-3.2||-5.1||-6.4||-5.2||-4.2|
|Public debt (% GDP)||37.0||44.2||50.5||47.5||47.0|
(e) Estimate (f) Forecast
- Two coastlines
- Large population (almost 50 million)
- Abundant natural resources (agriculture, minerals)
- Considerable tourism potential
- Cautious economic policy
- Institutional stability
- Sound banking system
- Sensitivity to commodity prices and US economic cycle
- Road and port infrastructure shortcomings
- Problematic security situation linked to drug trafficking
- Educational and healthcare shortcomings
- Large informal sector (60% of jobs)
- Lack of skilled labour and low productivity
- Legislative, judicial and administrative delays
- Structural unemployment, poverty and inequalities
Towards an improvement in activity in 2017
In 2016 economic activity was hit by weak commodity prices, particularly those of oil, and by the downturn in household consumption due to the increase in inflation and the rise in unemployment. In 2017, the country's economic performance is expected to improve somewhat, driven by the rise, though modest, in oil prices. This is because Colombia's external trade is very dependent on hydrocarbons (almost 50% of the country's exports) and to a lesser extent on mining and agriculture. Public investment spending is likely to be limited in order to offset the weak rise in income, but the government is expected to continue its programme of infrastructure improvement through private/public partnerships (PPP). Private investment, mainly directed towards the energy sector, is expected to remain sluggish. The expected decision on second round of PPP projects could, however stimulate investment. Private consumption is expected to pick up a little thanks to a recovery in household purchasing power linked to lower inflation resulting from the dissipation of the effects of the El Nino weather phenomenon, which pushed prices up sharply in 2016. However, private consumption will remain constrained by weak consumer credit growth due to high interest rates. The central bank, determined to dampen the pressure on prices, is likely to cut its rate only gradually.
Continuation of fiscal austerity policy
In 2016 the fiscal balance continued to widen, hit by the drop in revenues resulting from weak oil prices, despite cuts to spending, particularly on investment. In 2017, the public deficit is, however, expected to improve on the back of the expected rise in non-oil income. The government is committed to conducting a fiscal consolidation policy which is primarily aimed at maintaining the country's sovereign debt rating. It is, therefore, relying on the effective implementation of its tax reforms intended to bring in additional revenues estimated at 1% of GDP from 2017. These include, namely: raising VAT from 16% to 19% on some products and services, broadening the tax base by lowering the tax threshold, which will bring almost 440,000 new taxpayers into the system, and gradually cutting corporation tax in a bid to attract new start-ups and stimulate activity by existing businesses. The government's plans also include a provision to create a new tax on fuel, tobacco and sugary fizzy drinks.
Towards an improvement in the current account deficit
The current account deficit is expected to reduce gradually thanks to lower imports due to weak internal demand and the increase, though modest in oil prices. Energy imports (oil derivatives) are projected to decline with the end of expansion work at the country's largest refinery. Imports of consumer goods are expected to remain sluggish, hit by the peso's weakness against the dollar. Energy exports, on the other hand, are likely to benefit from the increase, though modest in oil prices, while the weakness of the peso will sustain non-traditional exports. Profit transfers by foreign companies are likely to be smaller than in previous years and also to contribute to the decline in the current account deficit. The balance of services deficit, meanwhile, is set to remain relatively stable; the rejection of the FARC peace deal is not expected to lead to deterioration in the country's security situation which would impact tourism revenues.
A government which is losing popularity
Awarded the Nobel Peace Prize for his efforts to end the conflict with The Revolutionary Armed Forces of Colombia (FARC), President Santos is in a precarious position after voters rejected the FARC peace deal in the referendum held in October 2016. A new agreement was, however, signed in November and will be subject only to the approval of the Congress. Despite various amendments made to the first version of the deal, the opposition, led by former president Uribe, is expected to continue to push for a "No" to the deal considered to be unsatisfactory, particularly regarding punishment of the rebels. An end to the conflict would, however, be a huge step forward for Colombia. The Colombian authorities estimate that an improvement in the security environment could have a positive impact on the economy of between 1 and 2% of GDP, thanks to a stronger institutional framework and increased investment. In the meantime, the unpopular nature of the fiscal reforms (higher taxes and duties) is expected to continue to affect the Santos government's popularity. Drug trafficking, the presence of armed criminal gangs and crime levels will continue to affect the business climate.
Last update : January 2017
The Colombian laws that talk about payment guaranty have been developed under general guideline known as “Proyecto INTAL” which is LATAM based. It has been slightly modified, taking into account orientation of AngloSaxon system of general law of Geneva 1930.
The rules of securities in Colombia, ruled under title II of decret 410 of March 27 1971 became effective in January 1/ 1972 known as “Codigo de Comercio”.
The invoice is the security tittle which is most frequently used as main for debt collection inColombia. In event of default, as long as invoices contain all law regulations it should be effective for Collection. In case of refusal payment from debtor is mandatory original invoice to legal processes.
When a sale has been done the seller ought to issue one original invoice and two copies. The original one must be kept by the seller to be used for legal issues, other copy handed to buyer and the other is used for accounting record.
Other securities that could be used are bill of exchange, Check, promissory note, payment agreement, bond, bill of landing, or waybill. By invoices or any other security an executor procedure can be started by lawsuit before a judge who issues a writ of execution. Then debtor is notified, if the debtor refuses to pay up the court officer will issue a property order attachment, this order can also be executed on vehicles, bank accounts, shares or some contracts.
For transactions of high value, payments are made through a national interbank network called SEBRA (Electronic bank of the republic) It uses a system of real time settlement. SEBRA turns use two systems CEDEC (Check Clearing System) and CENIT (National Electronic interbank compensation.). For low payments cash and check are used primarily, although the use of electronic payments has had high growth in recent years.
Recovery for the extra-judicial form begins with telephone contact to the debtor, along with sending a letter by e-mail or certificated mail, we request the payment of the debt immediately. In this first phase we indicate to the debtor that if he pays in this moment he will be saving the penalty interest, charges and legal fees.
In this instance we get the payment of the debt or else the signing of a settlement agreement, which is best option considering the cost and complexity of the legal Colombian system.
If debtor is not contacted by telephone or written, we review the feasibility of a visit to the debtors address in order to verify the physical condition of his company and initiate the study of a legal process if the payment is refused.
When debtor does not make the payment of the debt, we do the study of the securities, estates, bank accounts of the debtor or his co-debtors, legal budges study, and judicial history of the debtor.
The case is submitted to the attorney who is responsible for establishing the executive process making a seizure of property prior to the notice of demand.
For the application of the demand, the lawyer is responsible for delivering the judge all the facts and documents justifying the debt, which then the debtor will be required to conciliation. In these processes the defendant may appeal and for that reason the process is long and costly in Colombia.
The code of civil procedure, in the third book rules the presentation of claims classifying them according to minimum account, lowest amount and highest amount. According to that classification it designates the instance that is going to handle the claim.
In case of insolvency or bankruptcy, the process must be filed with the “Superintendencia de Sociedades”with the requirements of the law 1116 of 2006, who ought to assign the case to an agent or liquidator according to the situation of the debtor company.