Deficient transport infrastructure is holding back Colombia from boosting its economic growth, says the international ratings agency Standard and Poor’s (S&P). If it were to overcome this challenge, says the agency’s credit analyst Maria Gonzalez de Cosio, Colombia could increase its GDP growth by more than 1%, solidifying its status as the third-largest economy in the region.
Colombia has almost emerged from its 50-year conflict with leftist rebels and its economy is “already impressive”, but the Andean country’s transport network is “inefficient,” said S&P in its report titled “Can Colombia’s Government Unshackle the Economy by Removing Infrastructure Bottlenecks?”
A lack of funding, regulatory delays and corruption are cited as major stumbling blocks on Colombia’s path to economic success. The Andean country is bigger than France and Spain combined, but it has fewer roads, partly due to the country’s thick jungles and mountainous terrain.
Colombia is doing something to deal with the problem. The country has recently embarked on an ambitious infrastructure investment program to raise money needed to finance its road-building projects. Besides, it has set up a national agency to spearhead the infrastructure development program and has dished out a raft of laws to facilitate the construction of large projects.
In march this year, it set aside US$8 billion to overhaul its road infrastructure. This project alone is expected to add 0.7% to Colombia’s GDP, according to Finance Minister Mauricio Cardenas.
Thanks to its free trade agreements with the U.S., China, and the E.U., Colombia’s 4.5% growth will remain above the Latin American average of 2.5% in the next five years. To translate these agreements into long-term economic growth, the improvement of the transport network is crucial, noted the ratings agency.
To begin with, S&P says, Colombia should accelerate the pace of tendering processes and resolve land rights disputes.