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Colombia's External Debt Surges To 48.6% Of GDP, Testing Market Trust
(MENAFN- The Rio Times) Key Points
Colombia's foreign debt has quietly climbed to a record level. In September, external obligations reached $211.6 billion, or 48.6% of gross domestic product, up from $198.3 billion and 47.8% of GDP a year earlier.
That is a 6.7% jump in a year and roughly 4.9% more than at the end of last year. The burden is now slightly tilted toward the public sector.
Around $118.1 billion is owed by the government and public entities, some 27.1% of GDP, while private companies and banks owe $93.5 billion, or 21.5% of GDP.
Roughly 84% of the total is long-term debt, which reduces rollover risk but locks the country into high interest payments for years.
How this money is borrowed matters almost as much as how much is owed. On the public side, about 70% of external liabilities sit with the central government, and more than half of the stock is in bonds placed in global markets, complemented by loans from multilaterals and a smaller slice from bilateral creditors.
Private borrowers are dominated by non-financial companies, which rely mainly on foreign loans, intra-company credit inside multinationals and, to a lesser extent, bonds. All this comes on top of a public-debt ratio above 60% of GDP and recent downgrades by major rating agencies.
The government chose to cancel its precautionary credit line with the IMF, arguing that foreign-exchange reserves near $66 billion provide enough protection.
Markets and more fiscally conservative voices see a different picture: persistent deficits, rising debt and less external insurance.
For Colombians, the issue is simple. Every peso spent on interest is a peso not available for security, infrastructure or targeted social support.
For foreign investors and expats, the message is that Colombia remains a promising but increasingly leveraged bet, where discipline and predictable policy count more than grand ideological projects.
Colombia's foreign debt hit a record $211.6 billion in September, equal to 48.6% of GDP.
More than half of what the country owes abroad is now public debt in bonds held by foreign investors.
Rising debt, ratings pressure and the end of an IMF credit line leave the next government with less room for experiments.
Colombia's foreign debt has quietly climbed to a record level. In September, external obligations reached $211.6 billion, or 48.6% of gross domestic product, up from $198.3 billion and 47.8% of GDP a year earlier.
That is a 6.7% jump in a year and roughly 4.9% more than at the end of last year. The burden is now slightly tilted toward the public sector.
Around $118.1 billion is owed by the government and public entities, some 27.1% of GDP, while private companies and banks owe $93.5 billion, or 21.5% of GDP.
Roughly 84% of the total is long-term debt, which reduces rollover risk but locks the country into high interest payments for years.
How this money is borrowed matters almost as much as how much is owed. On the public side, about 70% of external liabilities sit with the central government, and more than half of the stock is in bonds placed in global markets, complemented by loans from multilaterals and a smaller slice from bilateral creditors.
Private borrowers are dominated by non-financial companies, which rely mainly on foreign loans, intra-company credit inside multinationals and, to a lesser extent, bonds. All this comes on top of a public-debt ratio above 60% of GDP and recent downgrades by major rating agencies.
The government chose to cancel its precautionary credit line with the IMF, arguing that foreign-exchange reserves near $66 billion provide enough protection.
Markets and more fiscally conservative voices see a different picture: persistent deficits, rising debt and less external insurance.
For Colombians, the issue is simple. Every peso spent on interest is a peso not available for security, infrastructure or targeted social support.
For foreign investors and expats, the message is that Colombia remains a promising but increasingly leveraged bet, where discipline and predictable policy count more than grand ideological projects.
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