By Antonio Guerrero
Less than a year after being sworn in, Colombia’s president Juan Manuel Santos is helping put his country back on the radar for investors scared away by guerrilla rebels and drug lords.
Santos: Colombia is back
In March, Standard & Poor’s restored Colombia’s investment-grade rating, which it lost in September 1999, and in April Santos and US President Barack Obama reached an agreement that pushes ahead a free trade pact that had been stalled since 2006.
S&P upgraded Colombia’s sovereign rating to BBB-, from BB+, citing an improved economic outlook and receding violence. Moody’s and Fitch currently rate Colombia one notch below investment grade. The government predicts the economy, which expanded 1.5% in 2009 and 4.3% in 2010, will grow as much as 6% this year.
The FTA with the US had been stalled by concerns over mistreatment and killings of Colombian labor representatives, prompting Obama to initially oppose the pact. However, both leaders met to iron out a deal under which Colombia agreed to implement labor protection measures. The move will benefit US producers, who will gain duty-free access to Colombia’s growing consumer base, as most Colombian products already have US preferential access under other trade arrangements.
Santos has also eased tensions with neighboring Venezuela, whose president, Hugo Chávez, was an outspoken critic of Santos’ predecessor, Alvaro Uribe. Santos is adhering to Uribe’s right-wing economic policies, which Chávez’s socialist regime opposes, but takes a more diplomatic approach to the Venezuelan leader. In April, Santos and Chávez signed 16 bilateral treaties on trade, drugs and border security, helping to normalize relations.
Santos gained popularity during his term as Uribe’s defense minister, dealing some harsh blows against FARC guerrilla rebels, including high-profile rescues of kidnapping victims and a controversial air strike on a guerrilla camp across the border in Ecuador.
To further protect Colombia from external risks, the Santos administration is now seeking a $6.1 billion two-year IMF flexible credit line. With Santos’ international credibility riding high, there is little doubt that the IMF will do its share to continue putting feathers in the president’s cap.