Colombia must make further efforts to reduce its level of debt, which is higher than that of other countries with the same BBB credit rating, a director from rating agency Fitch said on Wednesday.
Gross domestic product growth will be between 1.8 percent and 2 percent this year, said Richard Francis, the agency’s director of sovereign debt, below a previous Fitch estimate of 2.3 percent.
“The debt in terms of GDP is much higher than for the average of debt ratings, it is close to 50 percent, versus a 40 percent for the median (of countries) with BBB,” Francis told journalists at an economic conference in Bogota.
“You can say it’s necessary to have a larger adjustment next year to maintain the stability of debt in terms of GDP,” Francis said.
“We want to see a fall in debt in terms of GDP, not just that it stabilizes, more efforts are needed.”
The country’s economy grew 2 percent last year, while first quarter 2017 figures came in at 1.1 percent, below central bank estimates.
GDP is an indicator that measures the health of an economy.
In March, Fitch raised its rating of the Andean country to stable from negative.
The central bank predicts the economy will grow 1.8 percent in 2017, below the government target of 2.5 percent. Bank board member Jose Antonio Ocampo told Reuters last week he sees expansion at an even-lower 1.5 percent.
Francis predicted inflation will finish within or “very close” to the central bank’s target range of 2 percent to 4 percent. Twelve-month consumer prices were 4.37 percent in May.
A tax reform passed last year will help Colombia meet this year’s fiscal deficit target of 3.6 percent of GDP, Francis added.
(Reporting by Carlos Vargas and Nelson Bocanegra; Writing by Julia Symmes Cobb; Editing by Bernard Orr)