Colombia's sovereign debt issue
needs will be much higher and its economic growth prospects hurt
by the severe earthquake which hit the country earlier this
week, finance minister Juan Camilo Restrepo said on Wednesday.
"Because of the earthquake, we will have to increase it
(debt financing) substantially," he told reporters at a World
Bank conference in the southern German city of Munich.
"Colombia will of course be present in the private market
as well," Restrepo said, adding that new debt issues would
reach international markets in the coming months.
The earthquake, which killed hundreds, perhaps thousands,
and left many more homeless and hungry, struck one of Colombia's
key coffee growing regions on Monday, damaging farms and
processing plants but not crops.
"Certainly it will negatively effect our prospects for
growth in 1999," Restrepo said. The government previously
forecast growth between 2.0 and 2.5 percent for this year.
Despite the threat of an economic crisis in Latin America
following Brazil's currency devaluation earlier this month,
Restrepo said Colombia's current foreign exchange regime was not
He said the possibility of further devaluations in Venezuela
or Ecuador did not make the danger any greater.
"We are not going to respond with additional devaluations
in Colombia," he said. "We are prepared to assimilate any kind
of movement that could take place in our neighbor countries."
Restrepo said that the Colombian central bank has sold no
reserves to defend the peso since Brazil devalued the real.
"Even in the past weeks after Brazil, we have not had the
need to sell any reserves from our central bank," Restrepo
said, adding that reserves sales since September had been
Restrepo also said that the Colombian government does not
see any need to abandon its system of currency trading bands and
allow the peso to float freely.
"We don't see any need to float the peso or to go to a
currency board system like they have in Argentina," he said.
"There is some isolated opinion on that side but the
consensus in Colombia is to go ahead with our system of bands.
Restrepo said he had been in talks in Munich with officials
from the World Bank and the Inter-American Development Bank.
"Both organizations have offered the country their best
spirit to collaborate with us," he said.
Also present at the conference in Munich is World Bank
President James Wolfenshon and IADB President Enrique Iglesias.
Restrepo said that the effects of the earthquake on
Columbia's housing and infrastructure were "huge" and would
exceed initial expectations.
"The final assessment has not yet been done because the
earthquake took place 36 hours ago," he said. "What is clear
right now is that the cost in lives and housing and buildings
and infrastructure is a huge amount."