00:00Colombia has once again approached the IMF, and this time it might not bring bad news.
00:05Imagine that you had a gold credit card for years.
00:09She didn't use it that much, but it was there as a backup.
00:12A year ago you proudly cancelled it yourself, saying you didn't need it.
00:16although he could have remained as a reserve.
00:18In short, I had no outstanding debt on the card.
00:20Twelve months later, he is knocking on the same door of the same bank.
00:24He's not going to ask for money yet, but rather to ask for his accounts to be reviewed.
00:28In short, that is what Colombia has just done with the International Monetary Fund.
00:32Let's get down to specifics.
00:34The government asked the IMF to initiate the so-called Article IV consultation.
00:38This is basically an independent technical evaluation that the fund does on anyone.
00:44of its 191 member countries on their economic situation.
00:48Please note, this is not yet a loan application.
00:51It is the first step of a ladder whose final destination no one has yet confirmed.
00:56However, it is worth mentioning that the government had anticipated the need to resume dialogues
01:01with multilateral banks.
01:03But to understand why this matters, we need to talk about the missing money.
01:07According to figures presented by the Ministry of Finance, the State currently spends approximately 40
01:11billions of pesos a month and received only 29.
01:14Do the subtraction.
01:15A monthly gap of 11 trillion pesos.
01:18By 2027, without adjustment, the fiscal deficit would reach 9.4% of GDP.
01:24This was admitted by the Minister of Finance, Miguel Gómez.
01:27An unprecedented level.
01:28The government's goal is to lower it to 7.2%.
01:31And to balance those accounts, Colombia needs to earn around [amount missing] next year alone.
01:37266 trillion pesos.
01:38Part of that debt is internal, another part, almost 88 trillion, is external debt, that is, in dollars.
01:44That's the fundamental question.
01:46Where does that money come from and at what cost?
01:48All countries tend to go into debt to finance projects, programs, and so on.
01:53In some way, they are looking for money because mere tax collection is usually not enough.
01:59Here's where the story gets interesting.
02:00Colombia had already paid off all its debt to the IMF.
02:04In April of this year, the previous government celebrated that the country was now free of conditions.
02:10onerous from the fund.
02:11Months later, another government knocks on that same door again.
02:15And it's not contradictory if you look at it from this side.
02:17When investors have doubts about a country's finances, they charge it more to lend money.
02:22That's already happening.
02:24The country risk, which is what the market also charges Colombia for lending to it, rose in
02:28a matter of days.
02:29Therefore, openness with the IMF is fundamental and even necessary at this point, despite
02:35which was a debt that had been paid.
02:36Today, new and larger funding is required.
02:39But we'll get there.
02:41Among the analysts who follow the issue, there are basically two interpretations.
02:45Some say this is, above all, a need for money.
02:49With a gap of that size, neither the private market nor small organizations can reach
02:54to cover it themselves.
02:55Others feel that the most valuable thing here is not the money that is eventually lent.
02:59IMF, but the seal.
03:01Having an independent external evaluator endorsing the tax plan sends investors the message
03:08a sign that someone serious is monitoring the accounts.
03:11Most agree that it is indeed necessary to finally have that gold card.
03:16Again, if the market has more confidence, it will lend more to Colombia.
03:20And cheaper.
03:21So less money from the budget would go to paying interest and more to investment
03:27and projects.
03:28It's about saving money, ultimately.
03:30However, none of this comes for free.
03:32An eventual agreement with the IMF usually comes with conditions.
03:36More revenue, higher taxes, or spending cuts, or even both.
03:41The government has already said it doesn't want to raise taxes, but several experts agree that it's too late.
03:46Or sooner, that may still be one of the pieces that the fund demands on the table.
03:52So no, this isn't about whether the IMF is good or bad.
03:56Of course not.
03:57Everyone has their reservations.
03:58But there is one undeniable fact.
04:01Colombia needs money, and there are cheaper and more expensive ways to get it, ultimately.
04:05Reopening this door, even without borrowing a single peso yet, might end
04:11it is cheaper for the country than not touching it.
04:14Whatever comes out of that evaluation, whether it results in credit, a seal, or both, is what
04:19will define how much it literally costs to govern Colombia in the coming years.
04:24If this helps you understand why the IMF made headlines again this week, please share it and
04:29Tell us.
04:30What do you think?
04:31Is this a sign of order, or is it a sign that things are worse than they seem?
04:36seems?
