| LONDON, June 10
LONDON, June 10 Colombia's economy faces its
greatest risks this year from instability in neighbouring
Venezuela and the slump in commodity prices, the country's
finance minister said on Monday.
Growth forecasts for the Andean country are likely to be
downgraded, with 4.4-4.5 percent a likely rate for 2013,
Mauricio Cardenas told Reuters editors and Reuters Television.
Future growth however could see an annual boost of two
percentage points, thanks to planned increases to infrastructure
spending and if peace talks with Marxist-led FARC rebels - due
to restart on Tuesday - succeed in ending half a century of
"We are going to make an announcement by the end of this
week of between 4.4 and 4.5 percent, we are revising our
projections a little downward," he said of the growth forecast
which is currently at 4.8 percent.
The exact revision is dependent on economic data coming
through this week.
Falling commodity prices are an issue for Colombia, whose
main exports include oil, coal and coffee. The other worry is
Venezuela, which is facing shortages of basic goods from toilet
paper to wheat flour, raising fears of instability.
"Developments in Venezuela are very important to us - a
stable growing economy in Venezuela is very important from
Colombia's perspective," Cardenas said.
He added Colombia has been talking with Venezuelan ministers
about the possibility of offering food for oil, or food for
future oil reserves.
"We are very dependent on commodity prices, and whatever
happens to future oil prices," Cardenas said.
The government was likely to keep a Brent crude oil
reference rate of around $100 a a barrel for budget purposes, he
said, not far below the current $104 level.
The U.S. shale gas revolution has also cut the United States
as an export destination for Colombia's coal, he added.
Colombia has a potential growth rate of between 4.5 and 4.8
percent, but ambitious infrastructure spending plans could add
around a percentage point to those estimates, Cardenas said.
The government plans to spend $20 billion on infrastructure
over the next 10 years, with most focus on roads, and is looking
for around $30 billion from the private sector, he said.
"Better infrastructure will add one percentage point to
growth, and the peace process another percentage point,"
Cardenas said, adding that the impact of the peace programme
could be felt quickly.
President Juan Manuel Santos has said he wants the talks
with FARC ended this year. The two sides last month reached
agreement on the critical issue of agrarian reform.
More than 100,000 people have died in the war which has
diverted billions of dollars from the economy.
Cardenas said that if peace with FARC were agreed: "There
will be more investment, there will be more projects, the
sectors that will benefit the most are agriculture and energy."
(Additional reporting by Axel Threlfall; editing by Ron Askew)