(Reuters) -Colombia’s economy is currently undergoing a transition toward a more sustainable growth path, the International Monetary Fund said Thursday, highlighting tightened macroeconomic policies, slowing global growth and higher borrowing costs.
A “necessary” cooling of Colombia’s economy would help bring inflation toward the central bank’s target by the end of 2024 and narrow the current account deficit gradually, the IMF added.
However, some downside risks persist and remain elevated, the fund said.
Directors of the IMF, which concluded a consultation with Colombia on Wednesday, commended the South American country’s “decisive” monetary policy tightening, which it deemed consistent with targeting inflation.
The directors “welcomed the commitment to maintain a tight monetary stance until price pressures and inflation expectations are on a firm downward trend,” the IMF said.
A two-year, nearly $9.8 billion flexible credit line approved by the IMF in April has given Colombia “additional external buffers” and enhances the country’s resilience, the IMF added.
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(Reporting by Kylie Madry; Editing by Brendan O’Boyle and Sarah Morland)