Living with Headline Risk

Sep 1, 2001

Investors are applauding Colombia's economic team for straightening out the government's finances. But political uncertainty is rising with the approach of the 2002 elections.

Colombia may have a grim image as a land wracked with civil war and rampaging drug lords, but its reputation in international financial markets is improving day by day. Things began to change after Juan Manuel Santos took over as minister of finance last year. The decisive Santos dispelled the aura of indecision that surrounded the administration of President Andrés Pastrana and pushed basic economic reforms through Congress.

Those reforms sorted out Bogotá's fiscal problems by reducing transfers to local government and got the country back to growth. All the while, he and Juan Mario Laserna, the director of public credit, were buttering up the country's investor base, anxious to ensure a smooth transfer of power next year, when Colombians elect a new president.

"The Colombians came in early June and asked us how we look at foreign investors, how we look at debt, what...

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