In a bid to increase its competitiveness, which has been undermined by the rising value of the peso, Colombia has set aside $8 billion USD to overhaul its road infrastructure. Once completed, the infrastructure program is expected to add 0.7% to Colombia’s GDP, Finance Minister Mauricio Cardenas was quoted as saying in an Emerging Markets report.
Improving road infrastructure is long overdue in Colombia. Without updating its major roads to meet international safety and speed standards, analysts say Colombia would not be able to capitalize on the trade agreements it has signed with neighboring countries in the past ten years.
Therefore, the government is exploring ways to raise billions of dollars to fund construction of over 1,900 kilometers of roads, including 200 kilometers of dual carriageway roads, 53 kilometers of tunnels and 58 kilometers of bridges. Under the Fourth Generation Highways program, the government plans to invest a 23 billion USD over the course of next six years.
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. Once completed, the new roads will cut the travel time between Medellin and Cali from 15 to eight hours. Similarly, travel time between Medellin and Puerto Berrio, and Medellin and Cartagena, will also be reduced by half.
Colombia’s economy grew 4.9% in the fourth quarter of 2013 from a year earlier, faster than Chile, Mexico and Brazil. But the manufacturing sector did not enjoy this level of growth. Substandard roadways and the rising price of the peso has been cited as a bottleneck for the country’s export sector.
The currency has been pushed up partly by the United States’ gradual rollback of a $85 billion-a-month bond-buying program. Over the past fortnight alone, the peso jumped close to 5%.