Colombia is likely to receive investment-grade status for its debt next year, Finance Minister Juan Carlos Echeverry said Wednesday, confirming the improved outlook that credit-rating agencies have recently awarded the country.
“We hope that if we have credibility, we’ll obtain investment-grade next year,” Echeverry said during a conference. The government is moving to pass a law in Congress that would effectively put a leash on the fiscal deficit and entrench macroeconomic stability.
Colombia’s debt is currently one notch below investment-grade status for the three major rating agencies. The country lost investment-grade status a decade ago as a result of a steep fiscal crisis.
President Juan Manuel Santos is pushing a legislative package through Congress that could rein in the country’s fiscal deficit, one of the main hurdles for Colombia to obtain investment-grade status.
The central government deficit, which excludes state-owned companies and local governments, is expected to close the year at 4.4% of economic output. For 2011, the government estimates it will drop to 4.1%. The Santos administration has said that one of its main policy goals is to reduce the central government’s deficit to 1.5% in four years.
Demand for Colombian bonds has been high in recent months, pushing down yields, on expectations that the country could soon receive investment-grade status. (Darcy Crowe / Dow Jones)