Colombia Trading Like Junk Shows Dilemma Facing Poor Nations
- Government raising taxes, selling assets amid downgrade fears
- Debt markets shrug off unprecedented stimulus in U.S. and EU
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In a world of freewheeling fiscal stimulus, Colombia is the rare country wringing its hands over its deficit.
While the U.S. mulls a fresh $1.9 trillion in aid and the European Union plans a 1.8 trillion euro ($2.2 trillion) package with nary a whimper in their respective debt markets, Colombia is doing everything it can to ward off the wrath of bond vigilantes. After a relatively modest pandemic spending push widened the deficit, officials are planning $5 billion in tax increases and spending cuts, plus an additional $5 billion of state asset sales. They’ve vowed to scale back fiscal aid despite Colombia’s worst economic contraction on record.