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Colombia¡¯s solid macroeconomic institutional setting, grounded on a rules-based fiscal framework, a flexible exchange rate, and a modern inflation-targeting regime, has been the cornerstone of its macroeconomic stability. Yet, the pace of economic growth has been slowing. Colombia has significant potential to enhance its contribution to Gross Domestic Product (GDP) growth by increasing productivity - which has remained stagnant for decades - and further diversifying and expanding its exports. Addressing infrastructure gaps, improving educational outcomes, and strengthening institutions are crucial steps to further boosting the country's economic development.

Macroeconomic imbalances that surfaced during a strong post-pandemic economic recovery are correcting rapidly, with declining inflation and fiscal and external deficits. The economy expanded 0.6% in 2023, as the needed un-winding of stimulus policies and heightened policy uncertainty affected fixed investment. The official poverty and extreme poverty rates declined in 2023, marked by higher labor market earnings. The economy is projected to expand 1.5 percent in 2024 and slightly above the 2.9 percent potential growth rate in the following years, as inflation and interest rates recede.

Colombia faces significant social and geographic inequalities, including in human capital. To tackle poverty and stimulate prosperity more equally across all regions, it is crucial to foster more efficient and inclusive labor markets, reform the social security system andthe intergovernmental fiscal transfer system, and strengthen subnational government capacity to ensure widespread access to quality public services.

Colombia faces increasingly accentuated climate-related challenges. Climate-related events disrupt livelihoods and damage assets throughout the country with increasing frequency and severity Colombia¡¯s fossil fuel sector, a large source of fiscal revenue, exports and foreign direct investment (FDI), is vulnerable to global decarbonization. An orderly, gradual and fiscally responsible transition towards a more diversified and climate-resilient economy over time, aligning it to the country¡¯s ambitious climate goals would be beneficial for meeting the country¡¯s climate goals and long-term economic prospects.

Last Updated: Oct 09, 2024

Colombia¡¯s program is anchored in the Country Partnership Framework (CPF), approved in February 2024, that emphasizes the territorial dimension of development in alignment with the National Development Plan (NDP). Through this new framework, the World Bank Group¡¯s engagement will strengthen its focus on lagging and conflict-affected regions, improving equity of marginalized groups, enhancing innovation, and supporting Colombia¡¯s ambitious climate goals.

Colombia has a longstanding relationship with the World Bank. Since the approval of the first loan 75 years ago, the country has become one of the largest borrowers Bank-wide. The active portfolio is comprised of 14 IBRD projects totaling $2.3bn in IBRD net commitments and three stand-alone trust-funded projects (GEF and Bio Carbon Finance) with $66m in commitments. Additional grant resources complement ongoing lending programs.

The current portfolio includes, amongst others, a project to establish the multipurpose cadaster in selected municipalities to strengthen land tenure, a project for the improvement of quality of health care services to enhance the efficiency of the health system, and a project to promote resilient and inclusive housing complemented with GCFF and GPG funds.

The program includes a US$ $80 million project aimed at enhancing teaching methods and administrative practices in the education sector. Additionally, a US $750 million program supports policies focused on reducing income and gender disparities, promoting environmentally friendly growth, protecting biodiversity, and ensuring a transition to low-carbon energy sources.

This effort is complemented with research and reports, such as the Colombia Poverty Assessment, the Country Economic Memorandum, and the Human Capital Review, which provide in-depth analyses and recommendations. This is complemented by a robust Reimbursable Advisory Services portfolio.

ľ¹ÏÓ°Ôº's analytical studies have been key in shaping policies across crucial areas, providing core diagnosis. The Bank's knowledge agenda, its analytical work and its technical assistance have driven significant changes in areas like public finance, the shift towards renewable energy, and the improvement of school nutrition programs. Moreover, this work has led the way in collaborating with local governments, especially in improving services related to water, transportation, and housing.

Last Updated: Oct 09, 2024

ľ¹ÏÓ°Ôº supports Colombia¡¯s efforts to enhance territorial development while promoting a more inclusive and sustainable economic model to reduce inequalities and protect the country's biodiversity. The Bank will continue to support government efforts on climate change mitigation and adaptation.

Among some project?s results, the Colombia Multipurpose Cadaster Project has made a significant impact. So far, it has successfully distributed 29,472 land titles to small-scale farmers, with 10,272 of these titles granted to women. The Bank has promoted the provision of titles to women, either jointly with their spouses or individually, ensuring they have equal ownership rights. This strategy has been particularly important in addressing the challenges women encounter in securing property rights following the death of a spouse.

The project also empowered communities through education. The Intercultural School of Geography for Life - Multipurpose Cadaster, established in 2023, has played a crucial role in this endeavor. More than 500 people from 4 different departments, including peasants, Afro-descendants, and indigenous people, have actively participated in the program; more than 50% are women. The program has trained them in technical, social, and legal aspects of the cadaster, actively involving the communities in the process. Approximately 300 have graduated as para-surveyors, while 250 have become community promoters, extending the knowledge acquired to their communities. This initiative is demonstrating the Bank's commitment to integral development and capacity building in rural Colombia.

On the other hand, the Heart of the Amazon project, funded by the Global Environmental Facility, continues generating positive outcomes, particularly the increase in management effectiveness of national and subnational protected areas, covering close to 7 million hectares. Furthermore, through agreements signed with families for conservation, restoration, and non-deforestation commitments, and participatory culturally appropriate plans with indigenous people, sustainable agroforestry practices have been promoted on over 2 million hectares. The project also continues to support the government mainstreaming environmental criteria in multiple sectors like transport infrastructure and territorial planning. To date, a total of 15 thousand individuals have directly benefited from the project, of whom 44% are women.

Last Updated: Oct 09, 2024