Colombia 2018 | ECONOMY | COLUMN

TBY talks to Rafael de la Cruz, General Manager Andean Region, Interamerican Development Bank (IDB), on the sector.

Rafael de la Cruz

What will drive the Colombian economy in the short and medium term?

IDB's view of Colombia—and the entire Latin American region—is optimistic. For middle-income countries such as Colombia, Peru, Chile, Argentina, Brazil, and Mexico, the main driver of growth should be huge public and private investment in infrastructure, such as transportation, ports, airports, logistics, digital infrastructure, and so forth. Especially since the current lack of infrastructure is a well-known drag on their economies. The private sector is also interested in investing in these countries because of the great opportunities they represent. In general, 3-3.5% of GDP is invested annually by the public sector in infrastructure in countries like Colombia. In IDB's opinion, this figure should be closer to 6-7% of GDP per year. The first barrier is the lack of public fiscal and private financial resources. In Colombia, roughly 16-18% of GDP is from tax income, compared to 30-40% in Europe.

Can PPPs bring a whole new level of development to Colombia?

In general, the private sector is better placed to manage large infrastructure projects such as highways, though the government also needs more resources from the people that are not yet contributing to the public good.