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The original idea of his Minister of Finance, Rudolf Hommes , was that the country should import agricultural products in which it was not competitive, like corn, wheat, cotton and soybeans and export the ones in which it had an advantage, like fruits and flowers. In ten years, the sector lost 700.000 hectares to imports, represented mostly in heavily subsidized agricultural products from the United States, as a result of this policy, with a critical impact on employment in rural areas. [1]
Until 1997, Colombia had enjoyed a fairly stable economy. The first 5 years of liberalization were characterized by high economic growth rates of between 4% and 5%. The Samper administration (1994-98) emphasized social welfare policies which targeted Colombia's lower income population. However, these reforms led to higher government spending which increased the fiscal deficit and public sector debt, the financing of which required higher interest rates. An over-valued peso inherited from the previous administration was maintained.
The economy slowed, and by 1998 GDP growth was only 0.6%. In 1999, the country fell into its first recession since the Great Depression. The economy shrank by 4.5% with unemployment at over 20%. While unemployment remained at 20% in 2000, GDP growth recovered to 3.1%.
The administration of President Andrés Pastrana Arango, when it took office on August 7August 7 is the 219th day of the year in the Gregorian Calendar (220th in leap years), with 146 days remaining. There are 94 days in North Hemisphere summer, South Hemisphere winter. The Northern Hemisphere is considered to be halfway through the summer o, 19981998 was a common year starting on Thursday (see link for calendar), and was designated the International Year of the Ocean''. Events January January 1998 A massive ice storm, caused by El Nino, strikes New England, southern Ontario and Quebec, resulting, faced an economy in crisis, with the difficult internal security situation and global economic turbulence additionally inhibiting confidence. As evidence of a serious recession became clear in 1999, the government took a number of steps. It engaged in a series of controlled devaluations of the peso, followed by a decision to let it float. Colombia also entered into an agreement with the International Monetary Fund which provided a $2.7 billion guarantee (extended funds facility), while committing the government to budget discipline and structural reforms.
By early 2000 there had been the beginning of an economic recovery, with the export sector leading the way, as it enjoyed the benefit of the more competitive exchange rate, as well as strong prices for petroleum, Colombia's leading export product. Prices of coffee, the other principal export product, have been more variable.
Economic growth reached 3.1 % during 2000 and inflation was 9.0% although unemployment has yet to significantly improve. Colombia's international reserves have remained stable at around $8.35 billion, and Colombia has successfully remained in international capital markets. Colombia's total foreign debt at the end of 1999 was $34.5 billion with $14.7 billion in private sector and $19.8 billion in public sector debt. Major international credit rating organizations have dropped Colombian sovereign debt below investment grade, primarily as a result of large fiscal deficits, which current policies are seeking to close.
Colombia is well-endowed with mineralMinerals are natural compounds formed through geological processes. The term "mineral" encompasses not only the material's chemical composition but also the mineral structures. Minerals range in composition from pure elements and simple salts to very comps and energy resources. It has the largest coal reserves in Latin America and is second to Brazil in hydroelectric potential. Estimates of oil reserves in 1995 were 3.1 billion barrels (493,000 m³). It also possesses significant amounts of ferronickel, gold, silver, platinum, and emeralds.
The discovery of two billion barrels (0.3 km³) of high-quality oil at the Cusiana and Cupiagua fields, about 200 km (125 miles) east of Bogota, has enabled Colombia to become a net oil exporter since 1986. Total crude oil production averages 620,000 barrel/day (99,000 m³/day); about 184,000 barrel/day (29,000 m³/day) is exported. The Pastrana government has significantly liberalized its petroleum investment policies, leading to an increase in exploration activity. Refining capacity cannot satisfy domestic demand, so some refined products, especially gasoline, must be imported. Plans for the construction of a new refinery are under development.
The oil pipelines are a frequent target of extortion and bombing campaigns by the ELN and, more recently, the FARC. The bombings, which occur on average once every 5 days, have caused substantial environmental damage, often in fragile rainforests and jungles, as well as causing significant loss of life.
In 2002 there were 170 attacks on the 2nd largest pipeline, which travels 780 km from the Cano LimonCano Limon is an oil field in Arauca, on the border of Venezuela. It is also a pipeline which travels 780 kilometers to Covenas on Colombia's Caribbean coastline. It is jointly owned by the state oil firm Empresa de Petroleos de Colombia, or Ecopetrol, an to the Atlantic port of Covenas. The pipeline was out of operation for 266 days of that year. The government estimates that these bombings reduced the GDPIn economics, the gross domestic product GDP is a measure of the amount of the economic production of a particular territory in financial capital terms during a specific time period. Definition GDP is defined as the total value of all goods and services p of Colombia by 0.5%. The government of the United States increased military aid, in 2003, to Colombia to assist in the effort to defend the pipeline.
Colombia has 6.6 billion tons of proven coal reserves, and its coal production totaled 21.7 million metric tons (mt) in 1995. Production from El Cerrejon--the world's largest open-pit coal mine--located on Colombia's Guajira Peninsula, accounted for 65% of that amount. Colombia's exports of 18.4 million mt of steam coal in 1994 made it the world's fourth-largest exporter of this commodity. Private and public investments in Colombia's coal fields and related infrastructure projects are expected to enable the country's exports to grow to about 35 million mt.
While Colombia has vast hydroelectric potential, a prolonged drought in 1992 forced severe electricity rationing throughout the country until mid-1993. The consequences of the drought on electricity-generating capacity caused the government to commission the construction or upgrading of 10 thermoelectric power plants. Half will be coal-fired, and half will be fired by natural gas. The government also has begun awarding bids for the construction of a natural gas pipeline system that will extend from the country's extensive gas fields to its major population centers. Plans call for this project to make natural gas available to millions of Colombian households by the middle of the next decade.
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