Colombia's macroeconomic and fiscal policy framework will remain intact thanks to the success of center and center-right parties in the country's recent congressional elections, Fitch Ratings said March 13.
Fitch believes the electoral outcome will likely contribute to a continuation of Colombia's effective economic policy, including medium-term gradual fiscal consolidation.
Despite a presidential election in May which could shape future policies, Colombia's strong fiscal and macro policy institutions will likely prevent major economic policy changes, Fitch noted. The rating agency also does not expect a sharp divergence from the existing macroeconomic policy framework from any of the major presidential candidates.
In the case of major economic policy changes, the checks and balances built into Colombia's political system — including the public consensus that supports macro stability and facilitated the 2016 tax reform, the fiscal rule and framework, the congressional powers and the independent central bank — serve as key constraints.
Former rebel Gustavo Petro and conservative Ivan Duque won the Colombian presidential primaries March 11, emerging as the leading candidates of the left- and right-wing coalitions, respectively. In the congressional elections, no party won a majority in either the senate or the lower house, although the three biggest right-wing parties won 50 of the Senate's 102 seats.
Fitch expects Colombia to post economic growth in 2018 and 2019 of 2.8% and 3.5%, respectively, more modest than the 4% growth posted by the country before the 2014 oil shock.
