Colombia’s industrial sector is receiving more than twice the amount of credit it did last year in an effort to stimulate dragging sales and exports.
Santiago Rojas, President of financial institution Bancoldex, said that his bank provided 151% more credit over the first half of the year than compared with the first two quarters of 2012.
“There a strong demand for credit from the bank and from the Productivity Boost Plan (PIPE),” said Rojas.
Mr. Rojas and his bank are part of a nation-wide policy to boost Colombia’s shrinking industrials after manufacturers reported seven contractions over an eight month period for year-on-year output.
Together with President Juan Manuel Santos, Colombia’s Finance Ministry promised special financing through PIPE, a stimulus plan that was introduced earlier this year.
Another effort the government has made priority is to curb Colombia’s manufacturing woes by a revaluation of the peso. The peso, which was trading at 1,767 against the dollar in January of this year, has weakened to the government’s target range of between 1,900 and 1,950 pesos to the dollar.
Some manufacturers, however, feel that a weak peso is only one part of a complicated puzzle to boost Colombia’s industrials. The country’s infrastructure is underdeveloped, keeping costs of transportation high. That makes goods destined for export less competitive on the international market.
Julian Trujillo, an executive at French multinational manufacturer Saint Gobain S.A. believes “it’s going to take another three years at least for the industry to turn around.”