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.