Within the framework of Annual Congress of Confemáras, the manager of the Banco de la República, Leonardo Villar, He launched a warning on the course of the Colombian economy. According to his statements, collected by the time and his correspondent Noelia Cigüenza Riaño, the growth currently shown by the country faces serious limitations and could not be maintained in the medium and long term.
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“Towards the future we have a perspective with a strong fiscal deficit and a need to adjust the large economy. With this growth in demand that we are seeing possibly it will not be sustainable”said Villar during his speech.
He Issuer’s manager was emphatic in pointing out that sustainability does not depend exclusively on monetary policy or in the reduction of interest ratesbut of the structural competitiveness of the economy. “While the rates have dropped, the long -term ones rose. Without a balanced public spending it becomes difficult to be sustainable. In addition, there are doubts about the government’s ability to continue borrowing to the rhythm that is needed and that makes the future cannot be sustained”He warned.
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Factors that stopped rates
Villar also explained why the Banco de la República stopped the accelerated rhythm of cuts in its intervention rate, after having reached a peak of 13.4 %. According to the official, three key factors forced the strategy to moderate:
1. the increase in the minimum wage in 2025, which described as “very strong”, affected the process of reduction of inflation towards the 3 %goal. “It is good to raise salaries, but when inflation goals are unknown, the reduction can be affected and the purchasing power of workers can be sacrificed by a different way”, He explained.
2. The deterioration of the fiscal deficit, which began to be evidenced since November 2024, with worse projections to those initially planned by the Government.
3. The unexpected rebound of economic growth, Partially driven by international phenomena, which increased demand pressures.
“The Bank of the Republic has been forced to stop the quite strong reduction process that we brought from the interest rate. Since November we have only been able to lower it twice”He said.
With these statements, Villar sent a caution message to businessmen and public opinion: the country requires fiscal discipline, balance in spending and higher levels of competitiveness if it wants to ensure sustained economic growth in the coming years.
Portfolio writing with time information
