The World Bank has become a crucial source of funding for Colombia as
the global financial crisis makes covering the country’s fiscal deficit
more challenging.
The Washington-based multilateral lender plans to lend $4 billion
to the country between June 2008 and June 2011, Eduardo Somensatto, the
bank’s representative in Colombia, told Dow Jones Newswires in an
interview.
Colombia borrowed $940 million from the World Bank in the 2007-08
period. It borrowed $1.3 billion from the World Bank for the year
through June and will get another $1.2 billion for the 12 months
through June 2010. The country used to borrow $1 billion a year, he
said.
“Colombia can count on the bank because it has never defaulted not
only on World Bank’s [debt], but in general,” Somensatto said.
Countries are turning to multilateral lenders as international banks
are more cautious in their lending to governments amid their own
difficulties, said Andres Ortiz, the associated director at local
brokerage Global Securities.
The World Bank is considering doubling loans worldwide to $30
billion for its fiscal year ending June 2009 to respond to the crisis.
Colombia is the world’s seventh-largest recipient of World Bank
loans and the third in the region after Brazil and Mexico with an
outstanding debt of $5.9 billion.
The Colombian government plans to borrow $2.65 billion this year
from multilateral lenders, such as the World Bank and the
Inter-American Development Bank, to plug its widening 2009 budget
deficit, which is expected to reach the equivalent of 2.3% of gross
domestic product.
In the period June 2009-June 2010, World Bank will approve a $300
million loan to finance the construction of six urban mass
transportation systems and another $300 million loan to strengthen the
financial industry’s regulatory framework.
Separately, the World Bank plans to finance its activities by selling peso-denominated bonds on the Colombian debt market. (Dow Jones)