Colombia’s Government and Business Leaders Urge Interest Rate Reduction

Colombia’s government and industry associations have requested that the central bank lower interest rates and urged business leaders to resume investment decisions, as part of efforts to strengthen the country’s economy. The call comes after Colombia’s economy expanded by only 0.3% in the second quarter, much lower than expected. The central bank has forecasted growth of 0.9% for 2023, significantly lower than the 7.3% growth witnessed last year. Finance Minister Ricardo Bonilla emphasized the need to recover the economy and create financial conditions that encourage unified progress. Private investment in Colombia also experienced a significant decrease of 24% between April and June compared to the previous year. Jonathan Malagon, President of Colombia’s banking association, Asobancaria, urged businesses not to postpone investment decisions, expressing optimism about reduced borrowing costs due to lower interest rates in the future. Colombia’s interest rates are currently at their highest level in 25 years, attributed to the global inflationary impact of the COVID-19 pandemic. Business leaders and the finance minister have called on the central bank to initiate interest rate cuts. Bruce Mac Master, President of the Colombian business association ANDI, stated that several conditions exist that allow for consideration of a reduction in the interest rate. Most analysts anticipate the first rate cut to occur in September or October.