September 26, 2015 / 8:47 PM / 5 years ago

Colombia needs international money to fund peace deal: finance minister

NEW YORK (Reuters) - Colombia will need “significant” investment from the international community to pay for the historic peace deal promised within six months between Marxist guerrillas and the government, the country’s finance minister said in an interview on Saturday.

This week Colombian President Juan Manuel Santos and the Revolutionary Armed Forces of Colombia, or FARC, pledged to end a war that has killed 220,000 and displaced millions over half a century.

“Peace is closer to us now than it has ever been in five decades,” said Finance Minister Mauricio Cardenas. “But there will be costs.” He said the government would be coming up with an estimate of how much reconstruction could cost also within six months.

The Colombian government and the rebels have been negotiating for nearly three years but this week in Havana, Cuba, the two sides agreed to create tribunals to try former combatants, resolving one of the most significant hurdles to peace.

The justice accord would apply not just to the FARC but also to government troops and right-wing paramilitary groups.

While he did not know how much Colombia would seek from other countries, Cardenas said it would be a “significant figure.”

He expects international support for the deal because it will have benefits outside Colombia, including a potential reduction in drug trafficking. Some FARC units have formed an alliance with drug cartels, exchanging protection for money, though there are other drivers of the narcotics trade.

Colombia has already been spending a significant amount of its budget, or about 1 percentage point of GDP, on victim reparations, said Cardenas.

Conservative estimates predict a 1 percent boost in growth per year as a result of an eventual accord but Cardenas said that could reach 1.5 percent nationwide. In certain regions hardest hit by violence, some studies show growth of up to 4 percent, the minister said. He added, though, that the effects will not be immediate and it could take three or four years for the economy to expand, driven by agriculture, mining and tourism.

There are opportunities for large-scale agricultural production, as in neighboring Brazil, in Colombia’s eastern plateaus near the border with Venezuela, which have been largely inaccessible and underdeveloped.

“That is one of the main impacts of solving the conflict in Colombia, those areas could actually become productive,” Cardenas said, adding that rating agencies may look positively on the country’s outlook going forward because of the deal.

Reporting by Mica Rosenberg; Editing by Helen Murphy and Matthew Lewis

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