TEXT-Fitch: Colombia's entry into OECD could advance economic reform

Tue Jun 4, 2013 8:33pm IST

June 4 - The Organization for Economic Cooperation and Development's (OECD)
invitation for Colombia to launch accession talks with the multilateral
organization represents a positive step that could help propel economic reform
efforts and pro-growth policies, according to Fitch Ratings.

We see the invitation, in part, as recognition of Colombia's largely successful 
macroeconomic policies, which have helped sustain growth momentum, while 
attracting investment and keeping inflation rates low. Although growth has 
moderated in recent quarters, GDP grew by 4% in 2012. Inflation remains among 
the lowest in the region at 2% in April.

The consistency and credibility of the country's policy mix has supported 
Colombia's credit profile. We revised Colombia's Rating Outlook to Positive in 
March, affirming the 'BBB-' foreign currency Issuer Default Rating (IDR). This 
reflects increased resilience resulting from strengthening external accounts and
favorable government debt dynamics.

Entry into the OECD represents an opportunity for Colombia to make further 
progress in reducing structural weaknesses relative to investment-grade peers in
terms of institutional strength, competitiveness, income distribution and living
standards. Progress in these areas would also allow Colombia to take advantage 
of the increasing openness of its economy and broader cooperation with trade and
investment partners around the world.

The OECD includes 34 member countries with market economies that seek ways to 
promote policies supporting economic growth. Formal negotiations for accession 
between the OECD and Colombia will begin later this year. In addition to 
Colombia, Latvia also received an invitation to begin the accession process.
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