Colombia Infrastructure Report Q2 2016
BMI View: Additional financing availability on the back of new infrastructure funds that are supported by international development institutions will be instrumental in the implementation of Colombia's ambitious project pipeline. In light of low commodity prices, diversifying sources of funding for infrastructure will be critical if Colombia is to maintain robust growth in the sector. Latest Updates And Strcutural Trends
In the new low oil price environment, our Country Risk team forecasts GDP to grow by 2.9% in 2016 after an average of 4.8% between 2010 and 2014. In turn, we forecast construction industry value to grow 5.1% in real terms in 2016.
New private funds - including one that enables pension funds to invest in infrastructure - have been created. Diversifying the sources of funding for infrastructure in Colombia will reduce the cost of debt for projects as well as improve the overall risk profile of the country.
The lower oil price environment has prompted the Colombian government to revise its budget estimates significantly as oil revenues account for about one-fifth of total government inflows. In this context, encouraging private investment - through vehicles such as the above mentioned fund - will be critical to the implementation of the government's ambitious infrastructure plans.
Despite the headwinds highlighted above, the national road programme 4G continues to make progress with the third wave of public-private partnership projects being awarded. This positive trend in the transport infrastructure sector has been accompanied but increasing investment in the ports subsector.
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