Colombia has a public and private external debt of almost 200 billion dollars, an astronomical figure whose interest depends to a great extent on the Investment Grade granted to the country by the credit rating agencies. The awarding of new international loans also depends on this.<\/p>\n\n
With the pandemic, Colombia lost its Investment Grade, and has made efforts to recover and hopefully improve it. Moody\u2019s recent statements seem to indicate that what is to come will depend to a great extent on the outcome of the economic policy and reforms led by the government, which have suffered hard stumbles in the Congress of the Republic.<\/p>\n\n
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The evaluation of credit rating agencies<\/h2><\/h2>\n\n
Between May and July 2021, the credit rating agencies, Standard & Poor\u2019s and Fitch, downgraded Colombia\u2019s rating to what is called the loss of Investment Grade. This means that according to these rating agencies, Colombia decreased its credibility in terms of its capacity to pay its debts.<\/p>\n\n
The loss of the Investment Grade rating causes foreign lenders to charge Colombia higher interest rates for the money they lend, as they increase the likelihood that the country will default on its debts and doubt the stability of the economic policy.<\/p>\n\n
This, in turn, increases the amount of debt to be paid and, consequently, also the amount of money to be allocated for this purpose in the national budget.<\/p>\n\n
To make their evaluation, the credit rating agencies take into account the outlook for the economy, inflation, the stability of economic policy, the unemployment rate, the fiscal deficit and the current account. According to Banco de la Republica, Colombia\u2019s external debt in February 2023 was US$187,772 million, equivalent to 54.5% of GDP.<\/p>\n\n
The ratio to GDP is much lower in the case of Colombia than in countries such as Spain, where it is 113.20%; the United Kingdom (102.64) and the United States (126.43), among many others.<\/p>\n\n
On the other hand, it is important to note that Colombia is not the only country that lost its Investment Grade in recent years. During the pandemic, Argentina, Venezuela and Ecuador also lost it.<\/p>\n\n
Investment grade: a new evaluation<\/h2><\/h2>\n\n
In September 2022, Jos\u00e9 Antonio Ocampo, in his capacity as Minister of Finance, visited credit rating agencies in the United States to inform them about the stability of the government\u2019s economic policy and reported a very positive reception.<\/p>\n\n
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