Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No 60620-CO

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT

AND

INTERNATIONAL FINANCE CORPORATION

COUNTRY PARTNERSHIP STRATEGY

FOR

THE REPUBLIC OF COLOMBIA

FOR THE PERIOD FY2012-2016

June 12, 2011

Colombia and Mexico Country Management Unit

Latin America and the Caribbean Region

The International Finance Corporation

Latin America and the Caribbean Region

This document has a restricted distribution and may be used by recipients only in the

performance of their official duties. Its contents may not otherwise be disclosed without

World Bank authorization.

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ii

CURRENCY EQUIVALENTS

(Exchange rate effective as of June 12, 2011)

Currency Unit Colombian Pesos

US$1.00 COP 1,773

FISCAL YEAR

January 1 to December 31

WEIGHTS AND MEASURES

Metric System

ABBREVIATIONS AND ACRONYMS

APEC Asia-Pacific Economic Cooperation APL Adaptable program loan CAF Corporación Andina de Fomento CAT DDO Catastrophe deferred drawdown option CCT Conditional cash transfer CPPR Country Portfolio Performance Review CPS Country Partnership Strategy CTF Clean Technology Transfer DAC Development Assistance Committee (OECD) DDO Deferred drawdown option DDR Disarmament, demobilization, and reintegration DNP Department of National Planning DPL Development policy loan ECD Early childhood development GDP Gross Domestic Product GEF Global Environment Facility GFDRR Global Facility of Disaster Reduction and

Recovery GOC Government of Colombia IBRD International Bank for Reconstruction and

Development IDB Inter-American Development Bank IDA International Development Association IDF Institutional Development Fund IFC International Finance Corporation IDP Internally displaced population

IMF International Monetary Fund JSDF Japan Social Development Fund LAC Latin American and the Caribbean Region (World

Bank) NGO Nongovernmental organization NTF Norwegian Trust Fund NUTP National Urban Transport Program OECD Organization for Economic Co-operation and

Development M&E Monitoring and evaluation

MESEP Misión para el Empalme de las Series de Empleo,

Pobreza y Desigualdad

MHCP Ministry of Finance and Public Credit NDP National Development Plan PFM Public financial management PPP Public–private partnership PSIA Poverty and Social Impact Analysis SFLAC Spanish Fund for Latin America and the

Caribbean SME Small and medium-size enterprise SSC South-South Cooperation SSKE South-South knowledge exchange STI Science, technology, and innovation TA Technical assistance WBG World Bank Group WBI World Bank Institute

IBRD IFC Regional Vice President: Pamela Cox

Country Director: Gloria M. Grandolini

Task Team Leader: Sabine Hader

Country Manager: Geoffrey Bergen

Vice President for LAC: Thierry Tanoh

Director: Paolo M. Martelli

Task Manager: John Barham

Country Manager: Enrique Cañas

REPUBLIC OF COLOMBIA

COUNTRY PARTNERSHIP STRATEGY (FY12-16)

Contents

EXECUTIVE SUMMARY ..................................................................................................................

I. INTRODUCTION .................................................................................................................. 1

II. COUNTRY CONTEXT ............................................................................................................ 1 A. POLITICAL CONTEXT ............................................................................................................................ 1 B. RECENT ECONOMIC DEVELOPMENTS AND PROSPECTS ............................................................................... 2 C. MACROECONOMIC OUTLOOK ............................................................................................................... 4 D. POVERTY LEVEL AND TRENDS ................................................................................................................ 5

III. GOVERNMENT’S VISION AND DEVELOPMENT CHALLENGES ..................................................... 6

IV. WORLD BANK GROUP PARTNERSHIP .....................................................................................10 A. LESSONS LEARNED FROM PREVIOUS CPS AND STAKEHOLDER FEEDBACK .................................................... 10 B. PROPOSED WBG PARTNERSHIP STRATEGY ............................................................................................ 12 C. THE WBG’S INDICATIVE PROGRAM...................................................................................................... 29 D. DEVELOPMENT PARTNER COLLABORATION AND SOUTH-SOUTH KNOWLEDGE EXCHANGE ............................. 30

V. RISKS .....................................................................................................................................31

ANNEX A: CPS RESULTS FRAMEWORK .........................................................................................34

ANNEX B: CPS COMPLETION REPORT (CPSCR) .............................................................................45

ANNEX C: THE IMPACT OF HIGHER FOOD AND COMMODITY PRICES IN COLOMBIA ......................77

ANNEX D: RECENT TRENDS ON POVERTY AND INEQUALITY IN COLOMBIA ..................................79

ANNEX E: FISCAL RISK MANAGEMENT IN THE COLOMBIAN PUBLIC SECTOR .................................83

ANNEX F: COLOMBIA AND SOUTH-SOUTH KNOWLEDGE EXCHANGE (SSKE) .................................87

ANNEX G: COLOMBIA CLIENT SURVEY 2011 ................................................................................89

ANNEX H: COLOMBIA AT A GLANCE ............................................................................................91

ANNEX I: SELECTED INDICATORS OF BANK PORTFOLIO PERFORMANCE AND MANAGEMENT .......94

ANNEX J: COLOMBIA SOCIAL INDICATORS ..................................................................................95

ANNEX K: KEY ECONOMIC INDICATORS ......................................................................................96

ANNEX L: KEY EXPOSURE INDICATORS ........................................................................................98

ANNEX M: OPERATIONS PORTFOLIO (IBRD/IDA AND GRANTS) ....................................................99

ANNEX N: TRUST FUNDS OVERVIEW ......................................................................................... 100

ANNEX O: IFC COMMITTED AND DISBURSED OUTSTANDING INVESTMENT PORTFOLIO .............. 101

ANNEX P: MAP ......................................................................................................................... 102

ACKNOWLEDGMENTS

The World Bank Group greatly appreciates the collaboration and contributions of the

Government of Colombia in the preparation of this Country Partnership Strategy (CPS).

This CPS was prepared by a team led by Sabine Hader (World Bank) in collaboration

with John Barham (IFC) under the overall guidance of Gloria M. Grandolini and Enrique

Cañas. Core CPS team members included: Paloma Anós-Casero, Diego Arias Carballo,

Amparo Ballivian, Catalina Barjun, Harold Bedoya, Juan Carlos Belausteguigoitía,

Daniel Alberto Benítez, Raja Bentaouet Kattan, Geoffrey Bergen, Díomedes Berroa,

Greg Browder, Alejandro Caballero, Diana Cárdenas, Irene Chagasteles, Marie-Hélène

Collion, Elena Correa, Mauricio Cuellar, Elizabeth Currie, Richard Damania, Antonio

Davila-Bonazzi, Luís de la Plaza, Niels B. Holm-Nielsen, Leonardo Escandón, Talib

Esmail, Angela María Fonseca, Beatriz Franco, Natalia Gómez, Eva Gutiérrez, Thomas

Haven, Arturo Herrera, Federica Iorio, Theresa Jones, Irina Klytchnikova, Christoph

Kurowski, Martha Laverde, Dolores López-Larroy, Esperanza Lasagabaster, Rogelio

Marchetti, Andre Medici, Lars Moller, Fernando Montenegro, Edgardo Mosqueira,

Xiomara Morel, Alicia Pérez, Hnin Hnin Pyne, Rekha Reddy, Camila Rodríguez,

Mariangeles Sabella, Taimur Samad, David Sislen, Eduardo Somensatto, Claudia

Tabuenca, María Clara Ucros, Joao Pedro Wagner De Azevedo, Eduardo Wallentin, and

Fernanda Zavaleta.

Invaluable inputs and suggestions were received from the broader Colombia Country

Team and the peer reviewers: Sascha Djumena and Peter Siegenthaler, as well as from

other participants of the concept review and regional operations committee meetings.

EXECUTIVE SUMMARY

Colombia is an upper-middle income country with the fourth largest economy in Latin

America. President Juan Manuel Santos assumed office in August 2010 with a strong

political mandate that gave his ―national unity‖ coalition an 80 percent majority in Congress.

The elections demonstrated the maturity of Colombia‘s democratic process and reflected a

strengthening of political institutions. The new President is committed to continue

implementing the core policy framework established by the previous government, while also

promoting new reforms to boost growth and tackle poverty and inequality.

Colombia has a solid and stable economy with a large domestic market and a rich

natural resources endowment. A strong macroeconomic framework helped cushion the

impact of the economic crisis. By 2010, the Colombian economy had fully recovered from

the 2008-09 slowdown; GDP growth reached 4.3 percent in 2010, compared to 1.5 percent in

2009. Private domestic demand, supported by higher consumer and investor confidence and

access to cheap credit, has led the recovery process. On the supply side, the recovery was

spearheaded by the mining and financial sectors.

In December 2010, the Government launched its ambitious National Development Plan,

called Prosperity for All. The overarching goals of this Plan are to increase employment,

reduce poverty, and improve security. The Plan has three strategic areas: (1) Sustainable

Growth and Competitiveness, (2) Equality of Opportunities for Social Prosperity, and (3)

Consolidation of Peace. Moreover, it highlights four cross-cutting themes: (a) Relevance of

International Relations, (b) Environmental and Disaster Risk Management, (c) Good

Governance, and (d) Regional Development and Integration.

This Country Partnership Strategy (CPS) builds on the successful experience of the

prior World Bank Group (WBG) strategy in Colombia. It aims to support the new

National Development Plan. The WBG will step up efforts to enhance development impact

through selectivity and to provide added value to the country. The IFC hopes to increase both

its investment and advisory operations in Colombia, as market conditions permit. The WBG

will carry out activities either through financial, knowledge, or convening services for which

the Government or the private sector has expressed explicit need. These activities are

combined as a results-focused package of support grouped under three strategic themes: (a)

Expanding Opportunities for Social Prosperity; (b) Sustainable Growth with Enhanced

Climate Change Resilience; and (c) Inclusive Growth with Enhanced Productivity.

Despite the slow decline of poverty and inequality over the last decade, Colombia has

continued to strengthen its social policies to expand opportunities to the majority of the

population. Colombia‘s efforts to achieve lasting peace are also commendable. Still, the

country‘s recent history has been marred by violence and armed conflicts that have precluded

it from reaching its full development potential. Violence has displaced a large portion of the

population, and the new Government has adopted policies to further promote peace.

While in recent years progress has been achieved in fostering infrastructure

investments, Colombia lags behind other Latin American countries. Management of

infrastructure assets, including maintenance, and improved information systems remains a

critical challenge within the context of Colombia‘s three-tier system of decentralized public

administration. While urbanization rates have remained high, the quality of urban services

has not kept up with the growth of cities. Environmental management and climate change are

increasingly important areas of policy action in Colombia. Despite Colombia‘s major

improvements in environmental management, environmental degradation affects public

health and welfare in significant ways and compromises the country‘s potential for

sustainable economic growth.

Colombia also needs to focus on achieving faster and more inclusive economic growth. The country requires policy efforts geared toward converting the country‘s natural and

human resources into a development pattern that accelerates growth and shares its benefits

with broad segments of the population. In particular, it requires skillful management of risks

and fiscal policy challenges associated with natural resources wealth and careful monitoring

and evaluation of policies and programs conducive to inclusive growth. Transparent and

effective public sector institutions (at national and subnational levels) and a friendly business

environment will also facilitate this growth. And in support of innovation and

entrepreneurship for higher productivity, the development in the financial sector must deliver

efficient and stable services with access for all people.

The programs under these strategic themes reflect current dialogue with the authorities

and include the ongoing portfolio as well as new activities running until FY13. Within

the framework of the National Development Plan, new activities beyond FY13 will be

identified in agreement with the Government to acknowledge the needed flexibility and

responsiveness to emerging requests. The CPS Progress Report, which is envisaged after the

next Presidential elections in 2014, will provide an update on the WBG engagement.

The IFC will seek investments in areas where it can add the greatest value. The IFC‘s

main objectives are to foster greater entrepreneurship in advanced fields or in developing

innovative business models. Investments will be focused initially on education, infrastructure

development, investment climate, royalty management, and corporate governance. Also, IFC

may engage with selected agribusiness clients to enhance yields and productivity.

1

REPUBLIC OF COLOMBIA

COUNTRY PARTNERSHIP STRATEGY (FY12-16)

I. INTRODUCTION

1. Colombia is an upper middle-income country with substantial potential yet with

relatively high rates of poverty and inequality. It has a solid and stable economy with a

large domestic market and a rich natural resources endowment. At the same time Colombia is

particularly vulnerable to natural hazards and faces an important challenge in consolidating

peace following decades of internal strife and violence.

2. This Country Partnership Strategy (CPS) covers the fiscal years 2012-16. It

proposes a World Bank Group (WBG) integrated program of financial, knowledge, and

convening services and has been designed to selectively support the Government of

Colombia‘s (GOC) new National Development Plan (NDP) 2010-2014. The proposed CPS is

also grounded in the LAC Regional Strategy and the WBG strategic themes. Its five-year

span takes into account the GOC election cycle in order to provide a mid-term opportunity to

address potential government and policy changes that will be reflected in the CPS Progress

Report. The CPS core principles are flexibility, responsiveness, and innovation. Past

experience has shown that WBG support to GOC is most effective by being adaptive and

receptive to emerging needs rather than just a blueprint of the terms and scope of the

partnership with GOC. The focus on innovation corresponds with the needs of a

sophisticated middle-income country and the WBG‘s efforts to add value to the GOC

program. The CPS lays out the guiding principles for shaping this partnership.

3. This CPS provides a summary of (a) the country context, (b) the Government‘s

vision and development challenges, (c) lessons learned from the implementation of the

previous CPS as well as stakeholder feedback, (d) a proposed new strategy for the WBG, and

(e) a description of risks in Colombia.

II. COUNTRY CONTEXT

A. Political Context

4. President Juan Manuel Santos assumed office in August 2010 with a strong

political mandate that gave his “national unity” coalition an 80 percent majority in

Congress. He won the second round of the Presidential poll by more than 70 percent of the

vote against a former mayor of Bogotá. Santos campaigned on a continuation of former

President Alvaro Uribe‘s democratic security and economic policies. The elections

demonstrated the maturity of Colombia‘s democratic process and reflected a strengthening of

political institutions. The country has undergone a transformation since 2002, striving to

move away from internal violence, drug trafficking, and weak institutions that has plagued

the country for many years. Today, Colombia has a resurgent economy with promising

prospects. It is a safer, more stable country that is more popular with foreign investors, and it

aspires to join the OECD group of countries.

2

5. The Santos Administration registered several significant achievements early in

its first term. This includes the restoration of diplomatic and trade relationships with

Venezuela, which had been broken off shortly before the second round of the presidential

elections in July 2010. Relationships were also fully normalized with Ecuador. Moreover, an

agreement reached with the United States increases the likelihood that the bilateral Free

Trade Agreement, which was signed in 2006, will eventually be implemented. Overall, these

positive developments have helped boost the popularity ratings of the President and

strengthened the national unity coalition.

6. The Santos Administration has launched a very ambitious reform program. To

consolidate the fiscal stance and manage windfalls from commodities production, Congress

has approved a new fiscal rule, a reform of the royalties system, and a proposal to make

fiscal sustainability a Constitutional criterion. Tax exemptions have been reduced, loopholes

closed, and import tariffs lowered in an effort to enhance revenues and promote

competitiveness. Legislation has been passed to reduce informality and encourage youth

employment. A new legal framework is being introduced to improve the performance of the

health system, including the enactment of an ordinary Health Law in 2011. And, a Victims

Law (Ley de Victimas) will compensate victims who have been harmed by actions as a result

of conflict.

7. Municipal and regional elections are scheduled for October 2011, and the next

legislative and presidential elections are set for March and May 2014, respectively. The

outcome of the municipal and regional elections will help to gauge the support for the

various coalition members as well as the opposition during 2011–2015.

B. Recent Economic Developments and Prospects

8. Colombia is an upper-middle income country whose economic performance is

typical of the major economies in Latin America. The economy is well endowed with

natural resources, including oil, coal, gas, iron, and gold. The domestic market is sizeable,

making it important for aggregate demand growth. Agribusiness (particularly coffee) and

manufacturing (e.g., the car industry) are also relatively well developed. Improved security

combined with business-friendly investment rules has led to a surge in foreign direct

investment, particularly in the oil and mining sector.

9. Following a longer period of broad-based economic growth, the economy was

not affected too severely by the global economic crisis. Between 2002 and 2007, GDP

growth averaged 5.0 percent per year on account of an improving security situation and a

favorable external environment. The economy slowed down in 2008 to a growth rate of 3.5

percent, as economic policies were tightened to address overheating. The country‘s strong

macroeconomic framework and the resilience of the financial sector helped cushion the

impact of the global economic crisis. Monetary policy responded swiftly as the policy rate

was lowered from 10 to 3 percent. Fiscal policy also contributed to support aggregate

demand. Countercyclical policies were combined with a flexible exchange rate regime,

which acted as a shock absorber to counter the deceleration in external demand. By 2010, the

economy had largely recovered from the slowdown, although a collapse in exports to

Venezuela has held back some economic expansion. The GDP growth increased by 4.3

percent in 2010 compared with 1.5 percent in 2009.

3

Table 1. Key Economic and Fiscal Indicators (percent of GDP)

2007 2008 2009 2010 2011 2012 2013 2014

Real GDP growth (%) 6.9 3.5 1.5 4.3 4.6 4.5 4.5 4.5 Inflation (avg. %) 5.5 7.0 4.2 2.3 3.3 2.9 3.0 2.9

Oil price, Colombian mix (US$/bl) 66.2 90.2 56.6 73.3 99.3 100.1 97.8 96.9

Gross national savings 20.2 20.5 20.5 20.1 21.9 22.5 22.9 21.9

Gross dom. Investment 23.0 23.4 22.7 23.2 23.9 24.6 24.8 24.1

Export growth (FOB, %)+ 22.8 26.3 -12.2 21.4 25.6 5.8 8.3 3.9

- Oil exports growth (%) 15.6 66.8 -16.0 54.4 48.6 10.3 11.3 3.6

Import growth (FOB, %) 25.5 20.7 -16.0 23.0 12.6 6.2 7.0 6.5

Current account balance -2.9 -2.8 -2.2 -3.1 -2.1 -2.1 -1.9 -2.2

Foreign direct investment (net) 3.9 3.4 1.7 0.1 2.1 2.2 2.0 2.1

Gross reserves (months of G&S) ++

5.3 5.1 6.2 5.7 6.6 6.6 6.6 6.6

Total external debt +++

21.5 19.0 22.7 22.6 20.2 19.9 19.5 19.2

Total public sector revenues 27.2 26.3 26.5 24.5 25.2 25.9 25.9 25.7

Total public sector expenditures 28.2 26.3 29.1 27.3 28.8 28.5 27.7 27.3

Combined Public Sector balance -0.7 -0.1 -2.7 -3.0 -3.5 -2.5 -1.5 -1.3

Public debt 32.7 30.8 36.3 36.7 35.8 35.6 34.9 34.3

- o/w foreign-currency 13.7 12.5 15.9 13.7 13.4 13.3 13.1 13.0

GDP (US$ billions) 207.4 244.6 235.8 288.2 313.3 332.1 350.6 369.9

Note: +FOB = Free-on-board;

++G&S = Goods and services;

+++Public and private external debt.

Source: World Bank Staff projections based on DANE (the statistics agency), Central Bank, Ministry of

Finance and Public Credit, and the IMF.

10. As the recovery phase consolidates, Colombia is facing economic policy

dilemmas similar to those experienced by other Latin American countries.1

On the one

hand, the authorities face the challenge of keeping inflation expectations anchored in the face

of higher economic activity and rising inflation. On the other hand, international capital

flows are exerting appreciation pressures on the Colombian Peso and could also prompt

credit booms and asset price bubbles, which would in turn destabilize the financial sector. On

a positive note, the Colombian foreign currency bond credit rating was upgraded to

investment grade for the first time since 1999 by Standard and Poor‘s (in March 2011) and

by Moody‘s (in May 2011). This upgrade gives Colombia access to a new class of investors

and may increase capital inflows further. In a move to return monetary policy to a neutral

stance, the Central Bank increased the policy rate by 125 basis points during 2011, and this

coincided with a slight decline in observed and expected inflation (despite higher global

prices and a weather-related emergency.) The Government has taken a range of measures to

smooth the exchange rate adjustment toward its long-term equilibrium value, including a

program of reserve accumulation (with some sterilization), macro prudential measures, tariff

and tax adjustments, as well as non-monetization of dollar proceeds.

11. Colombia is experiencing some of the heaviest rainfall in recent history leading

to widespread flooding and landslides. The heavy and prolonged rainfall that peaked in

November and December 2010 (and which re-emerged in April 2011) is largely attributed to

the meteorological phenomenon known as La Niña. Almost 3 million people, especially the

poor, have been directly affected through loss of homes or being seriously deprived of access

1 See ―LAC Success Put to the Test‖ (World Bank, 2011) for a detailed discussion.

4

to most essential public services. Economic losses are expected to have exceeded 1 percent

of GDP, but the weather shock has not derailed the economic recovery. The impact on food

prices also proved temporary (see Annex C for details). The fiscal cost of the disaster

increased the Central Government deficit by 0.2 and 0.4 percent of GDP in 2010 and 2011,

respectively.

C. Macroeconomic Outlook

12. Colombia’s economy proved to be more resilient than other emerging market

economies, and it is recovering steadily from the effects of the global crisis. This

resilience is linked to a robust macroeconomic framework that rests on three mutually re-

enforcing pillars: (a) a responsible fiscal policy based on a credible medium-term fiscal

framework and the introduction of a fiscal rule; (b) a monetary policy based on an inflation

targeting regime (Consumer Price Index target of 3.0 percent with a tolerance of +/-1

percent) complemented by a floating exchange rate with moderate interventions; and (c)

sound macro and micro prudential policies combined with a solid financial system. In the

short term, growth and domestic demand is likely to be boosted by consumer and investor

confidence and the reconstruction program, as well as rising export volumes and solid

commodity prices.

13. The CPS baseline macro projections focus on the short- and medium-term

outlook. The projections incorporate the effects of the 2010 La Niña episode and the

government reconstruction program; the ongoing economic recovery; the latest assumptions

of prospects for the global economy, including higher commodity prices; and recent Central

Bank monetary and exchange rate policy announcements. The CPS baselines macro

projections are summarized as follows:

Growth and inflation. Given the ongoing economic recovery, real GDP is expected to

expand by 4.6 percent in 2011 and to converge to 4.5 percent in the medium term.

Private consumption and private and public investment will sustain domestic demand

growth in the short run. Inflation will stay on target (3 percent) over the projection

period.

Fiscal accounts. The Ministry of Finance has presented a credible economic and

fiscal strategy, which proposes a declining path for the fiscal deficit in 2011-13 in

preparation for meeting the 2014 target stipulated by the new fiscal rule (a structural

deficit of the Central Government of 2.3 percent of GDP). In line with the envisaged

fiscal adjustment for the Central Government, the combined public sector deficit is

also projected to decline from 3.0 percent of GDP in 2010 to 1.7 percent in 2014. As

a result, public debt is declining moderately over the medium term.

External accounts. The current external account deficit widened during the 2010-11

recovery as imports accelerated and factor income outflows increased. In the medium

term, this deficit will narrow again as imports moderate and commodity exports

continue to benefit from solid international prices and higher volumes. The deficit is

largely financed by net foreign direct investment.

5

D. Poverty Level and Trends

14. Economic growth in recent years has been accompanied by poverty reduction.

Between 2002 and 2009, poverty fell from 53.7 to 45.5 percent while the proportion of the

population that could not satisfy basic nutritional needs (the extreme poor) declined from

19.7 to 16.4 percent. While this is a positive development, Colombia‘s progress in reducing

poverty, given its economic performance since 2002, falls below the performance of regional

peers. Moreover, poverty levels remain relatively high given the country‘s income per capita.

In part, this is explained by an unequal distribution of income, as reflected by the Gini

coefficient, which is among the 10 highest in the world (see Annex D for details.) Food

prices are also relatively higher in Colombia, which among other reasons is associated with

the high cost of transport related to limited competition in the transport sector and unequal

road access.

Table 2. Poverty and Inequality in Colombia, 2002–05 and 2008–09

2002 2003 2004 2005 2008 2009

Poverty (%) 53.7 51.2 51.0 50.3 46.0 45.5 Extreme poverty (%) 19.7 17.0 17.0 15.7 17.8 16.4

Gini coefficient 0.594 0.573 0.579 0.580 0.589 0.578 Note: 2006 and 2007 data not available.

Source: Misión para el Empalme de las Series de Empleo, Pobreza y Desigualdad (MESEP).

15. Labor market rigidities and skill mismatches are also contributing to high-

income inequality. Colombian labor markets are still characterized by persistent, high-level

unemployment (close to 12 percent in 2009), as well as pervasive labor informality,

comprising 50-60 percent of the labor force depending on the definition used. Income

generation opportunities for the extreme poor are very limited, with the unemployment rate

close to 35 percent among this population. In addition, gender inequality in the labor markets

contributes directly to inequality but also to further labor market rigidities.2 High minimum

wages and labor costs, misperceptions of social security benefits, skill mismatches between

labor supply and demand, and weak labor intermediation systems explain the poor

performance in these labor market outcomes.

16. Despite advances, pronounced inequalities remain in terms of access to quality

social services. Capturing coverage of key services necessary for children, Colombia‘s

Human Opportunity Index, while adjusting for fairness in its distribution among the

population, is above the regional average. Encouragingly, between 1997 and 2008, there

were significant improvements in opportunities for children to receive health care; attend

preschool; complete high school; and, along with their families, gain access to electricity and

telephones. Nevertheless, significant challenges remain for provision of social services in

general, particularly in terms of unequal access to safe water, nutrition, food security,

comprehensive early childhood development (ECD), and quality education and health

services (see also Annex C, The Impact of Higher Food and Commodity Prices in

Colombia).

2 The ratio between female and male labor force participation was 0.54 in 2006, lower than the average for lower middle-

income countries (World Bank Gender Stats indicators, http://www.worldbank.org/gender ; Data and Statistics). Women

earned about 83 percent less than men after controlling for differences in education, age, and other characteristics; see H.

Nopo, A. Moro, and A. Chong, eds., Discrimination in Latin America: An Economic Perspective (Inter-American

Development Bank, 2009).

6

III. GOVERNMENT’S VISION AND DEVELOPMENT CHALLENGES

17. In December 2010, the GOC launched its ambitious National Development Plan,

called Prosperity for All 2010–2014 (Prosperidad para Todos 2010–14). The overarching

goals of the NDP are to increase employment, reduce poverty, and improve security. The

NDP has three main objectives: (1) Sustainable Growth and Competitiveness, (2) Equality of

Opportunities for Social Prosperity, and (3) Consolidation of Peace. Moreover, it highlights

four cross-cutting themes: (a) Relevance of International Relations, (b) Environmental and

Disaster Risk Management, (c) Good Governance, and (d) Regional Development and

Integration.

18. Colombia also wants to strengthen its international image. Diversifying foreign

relations and improving Colombia‘s image abroad are among the main goals of the Santos

Administration. A key priority will be enhancing economic links with Pacific Rim countries

and with countries in South and Central America. The GOC is also actively pursuing

membership of APEC and OECD. For the latter, membership requirements are challenging,

necessitating Colombia to continue addressing democratic as well as sound economic

reforms.

19. With the new National Development Plan the GOC will retain central elements

of the previous administration’s economic policy, namely attracting foreign investment,

fostering macroeconomic stability, addressing high unemployment and widespread

informality, reducing poverty and inequality, restoring peace and security, and improving the

business environment. Key development challenges include the following areas which are

linked to the WBG program of support: to reduce poverty and inequality; to further raise

human capital development, and to improve the impact of social services.

20. To reduce poverty and inequality, the social protection system requires further

integration and strengthening of institutional capacities. Although some social insurance

schemes have significantly increased coverage levels, the social protection system as a

whole, including health insurance, requires further integration to improve its reach and

effectiveness. Likewise, the conditional cash transfer program Familias en Accion and the

Juntos program, which focuses on reducing extreme poverty and involves tutors

accompanying poor households to ensure their preferential access to social services, have

significantly improved human capital development and opportunities among poor families;

but enhancing coordination between the two programs remains a critical challenge. In

addition, Familias en Accion and Juntos need to increase both coordination with social

services in a broader way and effective coverage of internally displaced people. Finally,

further creation of formal employment faces significant barriers — high labor costs, the

relevance of skills, and a complex regulatory framework to establish businesses.

21. To further raise human capital development, Colombia must continue to

develop the education system at all levels. Despite substantial progress over the past

decade, access to quality education remains unequal. Pronounced disparities persist with

poorer regions exhibiting lower average enrollment rates and student achievement levels than

wealthier regions, particularly at the secondary and upper-secondary levels. These disparities

impact the performance of the education system as a whole; given its GDP per capita levels,

Colombia performs subpar on international student assessments such as the Program for

7

International Student Assessment (OECD) and Trends in International Mathematics and

Science Study (International Association for the Evaluation of Education Achievement).

22. To improve the impact of social services, programs and systems require greater

coordination, enhanced regulation, and accountability. At the core of this challenge are

fragmented and insufficient information systems. The Ministry of Education‘s information

system, for example, does not cover all institutions that manage government resources and

provide education services. As the private (for-profit and not-for-profit) sector continues to

play an increasingly important role in education (about 70 percent in preschool, 20 percent in

primary and secondary education, and 43 percent in higher education), its full inclusion is a

key consideration in further strengthening the education information system as a whole.

Furthermore, institutional mandates of oversight, financing, and service provision within and

across different levels of government remain blurred with often-weak coordination and

accountability mechanisms. For example, some agencies are responsible for both provision

of services and the monitoring and evaluation of said services, which can create perverse

incentives. Combined, these deficiencies can negatively impact performance in Colombia‘s

human development sectors, particularly those that are highly fragmented or involve multiple

actors, such as health and early childhood development.

23. Colombia has taken significant steps toward the consolidation of peace. Between

2003 and 2009 the number of kidnappings was reduced by nearly 90 percent, acts of

terrorism by more than 80 percent, and subversive activities by 64 percent. In addition,

disarmament, demobilization, and reintegration (DDR) programs have also led to

disarmament of 45,000 ex-combatants via collective negotiations with paramilitary groups

and individual demobilizations from left-wing guerrillas. Despite these advances, the

consolidation of peace is still a very complex work in progress. Violence has migrated to the

urban centers and into the border regions; criminals have designed new ways to organize and

operate. More than 150,000 internally displaced families are expecting that their lands,

confiscated by illegal actors, be finally restituted; and around 3 million individuals of the

internally displaced population (IDP) continue struggling in urban areas to find social and

economic opportunities. Efforts to consolidate peace are not confined to police departments

and criminal courts. They are part of a broader initiative involving the whole of Colombian

society, promoting a citizenship culture based on the right and respect for peaceful

coexistence and humanitarian and human rights more broadly, and strengthening and holding

accountable democratic institutions and the justice system. It is essential to tackle the

difficulties in terms of access, efficiency, and effectiveness of Colombia‘s judicial system to

consolidate the peace process in the country that have been stymied by delays, costs, and

complicated processes to access the justice system.

24. While in recent years progress has been achieved in fostering infrastructure

investments, Colombia lags behind other Latin American countries. Chile, a country

with a smaller population than Colombia, has more than 2,400 kilometers of four-lane

highways compared to only about 800 kilometers in Colombia. The challenges to improving

the quality of public services, including transport and water, sanitation, and solid waste

management, are likely to require regulatory reform, institutional improvements, and

continued public investment and efforts to promote and attract private sector financing for

infrastructure. Management of infrastructure assets, including maintenance, and improved

8

information systems remains a critical challenge within the context of Colombia‘s three-tier

system of decentralized public administration.

25. Cities have been the engines of Colombia’s economic growth. More than 50

percent of Colombia‘s GDP growth in the last 4 decades can be attributed to economic

development in urban areas. Today, 75 percent of Colombians live among five large cities,

Bogotá, Cali, Medellin, Barranquilla, and Cartagena, which make these urban areas very

densely populated, although economic density remains low. While urbanization rates have

remained high, the quality of urban services has not kept up with the growth of cities. Land

management and housing development for low-income segments of the population is a

critical challenge, which the Santos Administration has identified as a policy priority.

26. The Santos Administration’s renewed focus on urban services, urban land

development, and expansion of housing for lower-income segments of the urban

population aims to address inequity issues and also stimulate job growth. The

Government‘s National Development Plan clearly highlights the need to manage urban

growth through improvements in public transportation systems, developing financially

sustainable approaches to expanding access to affordable housing, and consolidating many of

the improvements in basic services coverage through improved management and service

quality. Urban environmental issues — particularly in terms of air quality and management

of wastewater — remain equally important challenges.

27. Colombia is prone to natural disasters. While the extraordinary rainfall that

plagued the country during 2010 and 2011 may not be directly linked to anthropogenic

climate change, it highlights the country‘s continued vulnerability to an array of disaster risks

and the likelihood that adaptation to climatic events will be a priority for this and future

administrations. While Colombia, seen as a leader in managing disaster risk, has a

sophisticated institutional arrangement in place to manage disaster risk, significant work

remains in improving knowledge and risk assessments of territorial management; investing in

critical infrastructure, like drainage systems; and ensuring that institutional reforms and

investment are accompanied by robust enforcement of zoning requirements and building

codes. Colombia‘s critical ecosystems also remain vulnerable to climatic events and the

environmental services provided by many key ecosystems are crucial for the country‘s

continued growth and development.

28. Environmental management and climate change are increasingly important

areas of policy action in Colombia. Despite Colombia‘s major improvements in

environmental management, environmental degradation affects public health and welfare in a

significant way and compromises the country‘s potential for sustainable economic growth.

Colombia has a long history of environmental and natural resource management policies and

programs aimed to address issues of degradation and resource protection. The Santos

Administration has made clear the centrality of environmental issues in its program, creating

a dedicated Ministry of Environment. The proposed World Bank engagement under the CPS

is wholly aligned with the Government‘s renewed focus on sustainable development,

including positioning Colombia as a leader in the area of climate change.

29. Colombia faces fiscal challenges related to managing the commodity boom,

social security liabilities, and the risks associated with natural hazards. The economy is

becoming increasingly intensive in commodity production. Oil production rose by 25 percent

9

in 2002–10, from 600,000 to 800,000 barrels per day, while coal production more than

doubled from 40 million to 70 million tons. Macroeconomic challenges arise from the

potential Dutch Disease effect of an appreciating real exchange rate as well as commodity

price volatility, which increases economy-wide uncertainty. Given the fact that both national

and subnational budgets rely on commodity revenue, this can give rise to reduced budget

predictability and stability. Additional fiscal challenges relate to the Government‘s

obligations to provide health care and pension. A strong expansion in subsidized coverage,

rapid growth of demand outside the mandatory benefits package and a policy to harmonize

health benefit packages for all individuals have contributed to rising health care costs.

Meanwhile, pressures on the pension system arise from demographic change, migration of

members from the defined contribution to the defined benefit system, and low coverage

owing to high labor informality. Colombia is experiencing increasing economic losses as a

result of natural hazards. Natural disaster events also represent a substantial fiscal contingent

liability given potential losses to publically owned assets and the private assets of low-

income groups (which the Government would be compelled to partially compensate).

30. Good governance and increased transparency in Colombia’s economy remains

challenging and is one of the crosscutting priorities of the new Government. Although

considerable progress has been made in improving the effectiveness and credibility of

government institutions, increased transparency, accountability, and effectiveness remain

challenging and require clear definition by the Government. The Government of Colombia

realizes the necessity to increase transparency, improve management capacity, and

strengthen the accountability of public institutions. Furthermore, citizen participation in

politics and public debate, which is essential to generate social capital needs further

encouragement. The subnational governments collectively execute expenditures worth

roughly 10 percent of GDP (about a one-third of total public expenditures); they also raise

roughly 3 percent of GDP in tax revenue. It is critical to improve subnational management

capacity as new functions devolve to subnational governments. In addition to the challenge

of good governance, the performance of public financial management (PFM) systems

including public procurement is a critical factor for fiscal discipline, strategic allocation,

operational efficiency, and transparency in use of public funds. A 2009 World Bank national-

level PFM and procurement report3 concluded that the PFM system in Colombia possesses a

number of strengths that contribute to fiscal discipline and better control, such as legal

powers to contain budgeted expenditures, timely monitoring of budget execution data and

cash flows, centralization of revenues, and adequate debt management. In terms of

operational efficiency, public procurement could be optimized. Some positive steps in

modernizing the procurement system have been taken. With respect to the legal framework,

for example, in 2007 and 2008, Colombia enacted a new law and associated regulatory

decrees thereby making substantial progress toward bringing the Colombian system close to

internationally agreed standards. Critical work remains in terms of ensuring sustainability of

the procurement reform, including improving country institutional capacity; creating of a

public procurement bureau; enhancing transparency; promoting participation of the private

sector; and creating a more efficient, compliant mechanism.

3 Colombia- National Level Public Financial Management and Procurement Report, World Bank, June 30,

2009, Report No.: 55113-CO

10

31. Aiming to grow at 6 percent per year, Colombia must progress in productivity

and competitiveness to achieve this goal. Colombia's level of productivity is relatively low

in a regional comparison. Low productivity, in turn, is linked to the labor market where a

large proportion of workers and enterprises operate in the informal sector. Informal

enterprises have limited access to credit, do not compete internationally, and have limited

incentives to grow out of the shadow economy. To reduce the informality rate, the

Government must generate an enabling economic environment that encourages formal job

creation, invests in human capital, and manages individual incentives that favor informality.

32. Colombia is lagging behind countries with similar characteristics in the

development of science, technology, and innovation (STI). Colombia‘s STI sector growth

(amounting to 11.9 percent annual growth in real terms from 2006 to 2009) has outpaced the

economy‘s growth rate. As a result, investments in the sector have helped to expand basic

infrastructure services to support STI development. In spite of these efforts, total investment

in research and development in Colombia remains relatively low. It is 0.2 percent of GDP,

compared to Argentina, which invests 0.5 percent; Chile, 0.7 percent; Brazil, 0.8 percent; and

South Korea, 3.2 percent. The National Development Plan and the ―Plan Vive Digital

Colombia‖ emphasize the Government‘s commitment to scale up investments into research

and development and to address pending regulatory bottlenecks to reap its full potential. In

particular, the Government aims to address (a) organizational weaknesses; (b) the insufficient

use of mechanisms to protect intellectual property rights; (c) limited access to financial

instruments for innovative enterprises; (d) insufficient qualified human capital in relevant

areas with an emphasis on innovation; and (e) insufficient incentives to retain the

Colombians living abroad who have the potential to contribute to STI development.

IV. WORLD BANK GROUP PARTNERSHIP

A. Lessons Learned from Previous CPS and Stakeholder Feedback

33. CPS Completion Report. World Bank Group assistance to Colombia, an upper

middle-income country with the third largest portfolio in Latin America and the seventh

Bank-wide, offers lessons that are relevant to future Bank engagements with the country and

with other middle-income countries. Overall, the FY2008–2011 CPS program performance is

rated ―satisfactory‖ having achieved good progress toward all major expected outcomes. In

this context, the Bank, in close coordination with the borrower, has incorporated a broad set

of measures into both project implementation and supervision to strengthen the overall

fiduciary control framework and to safeguard individual operations.

34. The previous CPS was designed to be flexible and innovative in responding to

Colombia’s financial and development needs. This flexibility has allowed the World Bank

to explore new avenues of resources, mainly through trust funds, that financed unanticipated

Government requests for knowledge and advisory services. Just-in-time technical assistance

tailored for particular requests, policy dialogue, global knowledge transfer, and a fully

integrated trust fund portfolio resulted in an important and innovative aspect of the program.

While trust fund resources were not predictable at the outset of the CPS, the Bank ensured

selectivity during implementation so that these resources were aligned with Government

priorities. Colombia was also one of the first Bank clients to take advantage of the flexible

11

development policy loan (DPL) with Catastrophe Deferred Drawdown Option (CAT DDO)

as part of its integrated approach to disaster risk management. Combined with the other

ongoing activities by the Bank — spanning the range of financial and knowledge services —

Colombia has one of the most integrated programs in risk management of any Bank client.

Its multi-year, knowledge and advisory programmatic approach, where IBRD had an on-

going engagement with the Government in key areas, defined the annual work program (for

knowledge and convening services) according to the existing needs at the time. The IFC

advisory program also expanded in Colombia, and its services were also based on strategic

aims. This flexibility and just-in-time, multi-sectoral programmatic advisory approach

proved to be effective and should be maintained.

35. While all countries face risks, sound economic management, efficient and

transparent institutions, good governance, and proactive social investments help

mitigate the potential impact of internal and external risks. A strong institutional

framework and an overall government commitment to a coherent development effort

facilitate the design and implementation of a flexible, client-driven, assistance program.

Looking forward it is important to agree with the authorities on an integrated package of

financial, knowledge, and convening services with a focus on providing customized results-

focused development solutions in areas where the World Bank Group can add value.

36. Engagement with Colombia is also effective on knowledge transfer utilizing the

Colombian experience to the benefit of other, less-developed countries. Continued WBG

engagement with Colombia offers a win-win situation as already shown with the mass transit

system in Bogotá as well as the nationwide conditional cash transfer program Familias en

Accion, which are similar to programs being developed in other countries around the world.

37. Stakeholder feedback. In August 2010, after presidential elections, the WBG team

engaged promptly with the new authorities. The WBG team prepared a set of thematic policy

notes followed by an all-day meeting with President Santos and Government officials to

discuss the new Government‘s potential priority areas, provide early input into the new

National Development Plan, and seek feedback for the Bank‘s new CPS.

38. Following these discussions the Government began formulating its National

Development Plan, which was then subject to an extensive national consultation

process. The exercise drew on the input of 16 administrative departments and an ample

range of stakeholders from academia, NGOs, private sector, unions, the media, and — for the

first time — indigenous peoples groups. As part of the CPS process, the Bank participated

selectively in relevant Government consultation events. Given the extensive Government

consultations on the National Development Plan and the relatively limited scope of the WBG

in support of the National Development Plan, the WBG will continue to hold systematic

stakeholder consultations in the process of developing new operational engagements and at

mid- term CPS implementation.

39. In addition, to complement the Government’s consultation efforts, the Bank

carried out a national client survey. The survey process took place between February and

March 2011, and offered some important inputs for the preparation of this CPS. Overall,

stakeholders identified as the top development priorities in Colombia: (a) the reduction of

poverty; (b) enhanced economic growth and employment generation; (c) improved education

access and quality; and (d) peace. The survey suggests that the Bank is perceived to be

12

involved in some top development areas such as poverty and growth but less so in education

where a plurality would like to see the Bank more involved. Respondents were mainly from

government agencies (60 percent), followed by civil society organizations (18 percent),

private sector (10 percent), academia (10 percent), and media (2 percent). For details, see

Annex G.

B. Proposed WBG Partnership Strategy

40. The CPS aims to support selectively the new National Development Plan. The

WBG will step up efforts to enhance development impact through selectivity, as a means to

provide added value to the country. The WBG will carry out activities for which the

Government or the private sector have expressed explicit need either through financial,

knowledge, or convening services. These activities are combined as a results-focused

package of support grouped under three strategic themes: (a) Expanding Opportunities for

Social Prosperity; (b) Sustainable Growth with Enhanced Climate Change Resilience; and (c)

Inclusive Growth with Enhanced Productivity. Each of these strategic themes has three areas

of results with specified outcomes. The WBG aims to contribute toward these outcomes (as

detailed in Table 3, 4, and 5 throughout the discussion of each theme below). In some cases,

outcomes in this CPS cannot solely be attributed to the WBG since activities are often jointly

accomplished with the Government or other partners.

41. The programs under these strategic themes reflect the current dialogue with the

authorities and include the ongoing portfolio as well as new activities running until

FY13. Within the framework of the National Development Plan, new activities beyond FY13

will be identified in agreement with the Government to acknowledge the needed flexibility,

and responsiveness to emerging requests. The CPS Progress Report, which is envisaged after

the next presidential election in 2014, will provide an update on the WBG engagement.

42. The IFC expects to continue expanding its activities in Colombia supporting the

National Development Plan. The IFC investments and advisory engagements will largely

focus on enhancing the competitiveness of Colombia‘s private sector, and on increasing its

capacity to generate new jobs. The IFC aims to support the private sector-oriented adult

education sector, especially technical and vocational training for low- and middle-income

students. Education is a critical factor in reducing inequality as well as raising productivity.

Experience in other countries, such as Brazil, shows that working adults can double or triple

their incomes on graduation. IFC has already built up considerable experience in Colombia

through its support for Uniminuto, a network of not-for-profit colleges, which enrolled

26,500 students in 2009.

43. The IFC aims to enhance Colombia’s infrastructure and logistics by expanding

its work on structuring public–private partnership (PPP) projects in cooperation with

government agencies. The IFC also intends to further improve Colombia‘s investment

climate and trade logistics through its advisory services arm. The IFC expects to build on an

active range of projects in Colombia currently focused on trade logistics and simplification of

business registration processes. The IFC advisory services expect to expand with royalty

management projects in the growing extractives sector. The IFC intends to increase financing

of Colombian financial institutions, especially those focused on small and medium-size

enterprises, low-income communities, and women. While small businesses typically employ

13

more workers than larger companies, insufficient financing affects their ability to survive and

grow.

44. The IFC also intends to maintain its commitment to corporate governance, an

important issue given its substantial equity investments in Colombia and its ability to

promote best practices in the field. Equity investments account for one-third of IFC‘s

outstanding investments in Colombia. Housing may also become a growth area, with IFC

supporting mortgage loans that benefit low- and middle-income groups. And IFC expects to

ramp up its offering of technical as well as financial support for green-building codes and

construction methods.

45. Finally, the World Bank is offering its help to the Government in leveraging

different sources of financing through its convening power, financial expertise, and

relations. The Bank will work with Colombia to deliver financial structure to effectively

leverage additional sources of financing and to tap into capital markets (e.g., Green Bond,

Carbon Emission Rights sales contracts, joint financings, etc). In summary, Colombia has

been a regional leader in the use of WBG risk management products and new financial

structure and is expected to continue taking full advantage of WBG financial products.

Expanding Opportunities for Social Prosperity

46. Despite the slow decline of poverty and inequality over the last decade, Colombia has

continued to strengthen its social policies to expand opportunities to the majority of the

population. These efforts are concentrated in (a) enhancing social promotion and citizen

security through increased coverage of safety nets and social protection programs for the

poor and violence afflicted; (b) expanding educational opportunities for all; and (c)

improving the performance of basic social services, such as those related to health, early

childhood development, and education. The Bank has been an important partner in this

effort, through investment loans and DPLs, grants, knowledge and convening services, and

in-time technical assistance at Government‘s request.

Table 3: Expanding Opportunities for Social Prosperity - Results Areas and Outcomes

Enhanced Social Promotion and

Improved Citizens Security

Improved Opportunities In

Education

Improved Performance of Social

Services

Outcome 1: Better coverage of

Unidos program (merger of two key

poverty reduction programs).

Outcome 2: Increase in the coverage

of municipalities that offer active

labor market policies to enhance

labor productivity and reduce

barriers to the employability of the

poor.

Outcome 3: Increase in number of

land rights protected of internally

displaced people who abandoned

their land due to forced

displacement.

Outcome 1: Increase in enrollment

rates (primary and lower secondary;

and secondary education) of

students from poor and rural

households (31 poorest territorial

entities, including 17 departments

and 13 municipalities).

Outcome 2: Increase in tertiary

education enrollment of students

from poor households.

Outcome 1: Strengthened

information systems to monitor

service delivery and strengthen

accountability in health, education

and ECD.

14

Enhanced Social Promotion and Improved Citizens Security

47. Enhanced social promotion is critical in the fight against poverty and more

broadly against inequality. The Bank has been supporting the development of Colombia‘s

social promotion system since the inception of the conditional cash transfer program

Familias en Accion almost a decade ago. Since then, it has provided advice in the design,

implementation, and evaluation of the Juntos and most recently Unidos anti-poverty strategy.

Furthermore, its multi-year programs of knowledge and convening services have gone

beyond supporting the social promotion system to promoting inclusive, equitable, and

efficient social protection for all Colombians. In the future, these services will focus on the

development and implementation of the National Plan for Social Prosperity — that will

include analyses to support the Unidos strategy, which aims to improve the coordination and

strengthening of the Familias en Accion and Juntos programs, helping ensure the alignment

with other social services and income-generation and active labor market programs — and

review of existing capacity and international experiences to develop a platform to promote

social innovation. The Bank has also been supporting development of Colombia‘s social

protection system through operations and advisory services, focused on achieving (a) greater

integration, efficiency, and equity of social insurance through expansion of information

systems for social security contributions and the centralized registry of beneficiaries of all

social programs; (b) improvement of the targeting, efficiency, and articulation of social

assistance programs (SISBEN); and (c) promotion of higher-quality training and employment

services, as well as a strategy to promote income generation among the extreme poor,

including social innovation and approaches that involve the private sector. Potential areas of

knowledge services include support for the creation of a system that promotes labor market

competencies and tackles barriers to employability, and design of temporary employment

programs and a national labor intermediation system.

48. The Bank is supporting Colombia’s efforts to achieve lasting peace and greater

gender equity. The country‘s recent history has been marred by violence and armed

conflicts that have precluded it from reaching its full development potential. Violence has

displaced a large portion of the population. The Bank is actively supporting the joint efforts

by the Government and the international community with knowledge and convening services

as well as trust fund financing. The ongoing Peace and Development Project aims to assist

vulnerable, low-income, and displaced populations in rural and urban communities in the

conflict-affected regions; this assistance comes by reducing risk of further exposure to

violence and mitigating the negative impact of possible derived effects. The Bank is also

implementing a grant to protect the land and patrimony of internally displaced populations.

The Bank plans to continue work in peace and development through technical assistance and

several grants that will focus on youth at risk, Afro descendants, ex-combatants, displaced

populations, gender issues, and strengthening policies and institutions to protect human

rights. Given the high number of people affected by conflict in the country (about 15 percent

of the total population), the Bank will continue to support Colombia in improving strategies

to assist internally displaced populations in a comprehensive and sustainable way.

49. Critical gender issues in Colombia include labor markets segmentation,

domestic violence, and early childbearing. Gender issues are fully integrated in the WBG

program and in addition the Bank offers several grants with a concrete focus on gender

issues, specifically among IDPs. These are designed to (a) increase the economic

15

empowerment of women in IDP communities; (b) assist these women to join the formal labor

force; (c) build the assets of internally displaced women (including greater food security); (d)

help understanding of the causes of political and/or domestic violence against women and

develop tools to mitigate it; and (e) increase participation of women in the Peace and

Development Project. A recent review of this work by the Bank‘s Internal Evaluation Group

highlights the need to support gender equality in the area of employment and opportunities;

as a direct consequence, the Bank is closely engaged in supporting the Secretary for

Women‘s Issues in the Presidency with an initiative to certify those businesses and

enterprises that adopt gender-neutral employment policies.

Improved Opportunities in Education

50. In order to support continued economic growth and reductions in poverty and

inequality, it is imperative that Colombia raise human capital development by

improving opportunities in education at all levels. This includes improving quality in pre-

school, basic, and secondary levels; promoting relevance in upper secondary, including

vocational and technical education; and increasing enrollment while decreasing dropouts at

the tertiary level. The World Bank will continue to support Colombia in these efforts through

several projects. The ongoing second phase of an adaptable program loan (APL) for the

Rural Education Project further expands opportunities for non-urban students by

supporting increased delivery of educational resources and implementation of flexible

education models in rural areas. The Antioquia Upper Secondary Education Project

supports the Department of Antioquia‘s efforts to improve access, retention, and outcomes

among upper-secondary schools to improve the employability of young people and increase

labor force competitiveness. The Education Quality Project aims to improve the design,

application, evaluation, and use of assessments to inform policies and initiatives to enhance

the quality of education. The first phase and upcoming second phase of an APL for the

Student Loan Support Project has been instrumental in increasing enrollment and

graduation rates among tertiary students from economically disadvantaged backgrounds.

Complementary to the financial services, the Bank is involved in a multi-year Program of

Knowledge Services, Skills for Shared Growth, as well as convening services to support

GOC efforts to increase education quality and skill formation, identify determinants of

student learning in order to better inform policy and improve technical and institutional

capacity to conduct research, and to monitor and evaluate education policies and programs.

In FY13, the program will include a joint World Bank/OECD review of the tertiary education

system.

51. The IFC plan to increase its operations in adult education, with a focus on technical

and vocational training, fits well with this approach. The IFC aims to reach low-income

students either through direct financing for technical and vocational colleges, or possibly

through a loan program designed to meet students‘ needs. Complementary to these projects,

the World Bank will continue to provide a multi-year program of knowledge and convening

services to support efforts to increase education quality and skill formation. These services

will include, among other activities, an assessment of teacher performance, policy notes on

technical education, and the establishment of a comprehensive database of learning outcomes

that allows tracking progress across various student assessments and the effect of time

changes on overall student performance.

16

Improved Performance of Social Services

52. Improving the performance of social services hinges on strengthening

information systems and planning, coordination and accountability at and across all

levels of government. In support of these goals, the World Bank will continue to provide a

multi-year program of knowledge and convening services. In the short term, this program

will assess the information systems in health, early childhood development, and education,

and will issue recommendations to strengthen the systems using innovative information

technologies and platforms. In health and early child development, the program will also

assess accountability arrangements between central and local governments. In early

childhood development, Bank efforts will support development of the national multi-sector

strategy, De Cero a Siempre, which aims to consolidate currently fragmented efforts to

provide young children of all families, particularly the poorest, with access to high-quality,

comprehensive ECD services.

53. The multi-year program of knowledge and convening services will be complemented

through a DPL and three trust fund-financed projects. The enhancing governance and

accountability arrangements of health insurance schemes in Mexico, Colombia and Peru

seeks to analyze the current situation and explore options to enhance current organizational

arrangements and information systems for improving governability of health insurance in

Colombia. Implementing the Right to Health through Universal Health Insurance

Project aims to strengthen participation of academic centers and civil society in developing

instruments and foster dialogue on how to fairly and efficiently ensure rights in health.

Furthermore, a Fiscal Sustainability and Growth Resilience DPL series will support the

adoption of critical legal and regulatory reforms to better manage fiscal pressures stemming

from the harmonization of benefit packages among population groups and to improve

reimbursement practices and enhance the financial sustainability of the health system as a

whole. In FY12, the Bank is also supporting the GOC with the Strengthening Governance

of Early Childhood Development Programs (SFLAC grant), which includes provision of

continued knowledge services to help improve coordination and governance arrangements

under the ECD service delivery system, rationalize the existing complex set of overlapping

programs, and design and provide technical assistance to implement a comprehensive

information system for monitoring and evaluation. In addition, the Colombia Enhancing

Governance, Transparency, and Accountability in Education Project (IDF grant) aims to

strengthen education efficiency through improved monitoring, accountability, and oversight

of the sector, including the establishment of a superintendence of education.

Sustainable Growth with Enhanced Climate Change Resilience

54. The areas of sustainable urban development, environmental management, resilience

to climate change, and disaster risk mitigation are high priorities for the World Bank‘s

engagement under this CPS. These activities have gained prominence given the challenges of

meeting Colombia‘s ambitious plans for growth and economic development with the explicit

policy objectives of the new administration to make development environmentally and

socially sustainable. The Bank-supported program aims to continue addressing the needs of

Colombia‘s highly urbanized population – through better land management, improved

17

services, and governance – while maintaining Colombia‘s position as an international leader

in environmental management.

Table 4: Sustainable Growth with Enhanced Climate Change Resilience - Results Areas and Outcomes

Improved Sustainable Urban

Development

Enhanced Disaster Risk

Management

Improved Environmental

Management and Climate Change

Resilience

Outcome 1: Increased population

benefitting from improved

transportation services in large

cities.

Outcome 2: Increased population

benefitting from improved

transportation services in medium-

sized cities.

Outcome 3: Improved institutional

capacity of the Central Government

to plan and deliver transportation

services.

Outcome 1: Strengthened technical

capacity for disaster risk

management at national and regional

levels.

Outcome 2: National Policy for

Disaster Risk Management

formulated.

Outcome 1: Government has

developed a national policy for

climate change and a national low-

carbon growth strategy.

Outcome 2: Government has

mainstreamed improved

environmental practices in the

agricultural sector through a scaling-

up of silvopastoril livestock

systems.

Improved Sustainable Urban Development

55. Seventy-five percent of Colombians live in cities. Colombia‘s largest city, Bogotá is

home to 8 million; with 18,000 people per square kilometer, it is the densest populated city in

the Western hemisphere. At the other end of the spectrum lie 927 municipalities with fewer

than 20,000 people, fairly dispersed across the national landscape. Population density is the

signature of Colombian cities, but economic densities are low. Bogotá, Medellín, and

Bucaramanga rank among the 50 most densely populated cities in the world. Urbanization

has stimulated the concentration of people and jobs, generating economies of scale and

agglomeration. The urban economy has contributed much to Colombia‘s economic progress.

Building on industry and services, the urban sector has contributed more than 50 percent to

GDP growth over the past 40 years. A key goal of the Government‘s new National

Development Plan is to improve the urban living environment, which includes improving

access to and quality of basic services, improving the urban environment, and expanding

access to affordable housing solutions for the poor.

56. Over the last 30 years the World Bank has supported Colombia‘s urban development

agenda on the national as well as subnational levels in urban housing, transport, solid waste

management, and water and sanitation; and the Bank‘s current portfolio reflects the centrality

of urban services and environment. The Bogotá Urban Services Project assists the District

of Bogotá to implement a strategic portion of its 3-year Development Plan through urban

transport solutions to improve mobility and strengthening of the cadastre system. The Bank

is also supporting the development of sustainable urban transport in large and medium-sized

cities through the Government‘s pioneering and widely recognized National Urban

Transport Program (NUTP), which supports the financing of sustainable public transport

systems. The IFC may expand a successful subnational financing program for urban

improvement to other cities. In 2010, IFC committed a US$45 million senior loan to the

metropolitan municipality of Bogotá to finance its 2007-2008 capital expenditure program

and rehabilitation of streets, sidewalks, and bike paths. In the near term, Colombia is likely to

access the Clean Technology Fund (CTF) resources to further develop low-carbon solutions

18

for expanded public transport (a CTF Investment Plan totaling US$100 million was approved

in 2010).

57. In the area of water and sanitation, the GOC has been a leader in adopting

sound water sector policies. Among the forerunners of decentralization, the GOC

established a legal framework that clearly separates service provision from policy-making,

thus allowing private sector participation. The key to success in the Colombian water sector

reform has been the development of homegrown solutions and at times the skillful adaptation

of models (successfully used elsewhere) suited to particular circumstances and culture of

Colombia. As a result, Colombia has made substantial progress in the expansion of water

supply and sanitation services. As of 2010, urban water supply access was over 95 percent

(rural water supply coverage was 71 percent) although service quality remains uneven.

Sanitation access has also improved significantly in recent years with urban coverage of over

90 percent. Over the years, the World Bank has supported Colombia through advisory work,

capacity building, and lending services. Since 1988, the World Bank has provided a series of

loans with a total value of over US$700 million to the Colombian water supply and sanitation

sector. The IFC is helping to finance Barranquilla‘s water and sewer system with a US$10.9

million guarantee, and hopes similar risk management structures or direct financing

programs can be used to support local infrastructure projects. Remaining challenges in the

sector include the need to improve multi-city service quality, improve access in rural areas,

and dramatically improve wastewater management.

58. Ongoing operations within the sector include the La Guajira Water and Sanitation

Infrastructure and Service Management Project, which aims to support the development

of financial sustainable utilities in one of Colombia‘s lagging departments and to improve the

quality of basic service delivery in La Guajira‘s 15 municipalities. The Rio Bogotá

Environmental Recuperation and Flood Control Project is an example to urban water

quality management, which aims to transform the Río Bogotá — a terribly polluted open

sewer — into an environmental asset for the District of Bogotá by improving water quality,

reducing flood risks, and creating multi-functional areas along the river.

59. Among the challenges of solid waste management in Colombia, a significant

proportion of solid waste is disposed of inadequately. Colombia‘s 1,102 municipalities

produce approximately 28,800 tons of solid waste per day. Approximately 35 percent, or

10,000 tons per day, of this waste is generated in Bogotá, Cali, Medellin, and Barranquilla,

while medium-size cities and smaller municipalities generate the remaining 65 percent, or

18,800 tons per day. It is estimated that a large proportion of this waste is inadequately

disposed in open-air dumps, bodies of water, and other environmentally sensitive sites.

Inadequate disposal results in environmental and health problems that include surface and

groundwater contamination, air pollution, and increased vector-transmitted (flies and

rodents) illnesses. The Bank has a solid waste management project under implementation

that helps to address some of these key issues through public–private partnerships for the

development and management of multi-municipal regional sanitary landfills.

60. In the area of housing and urban land management, the Bank supports a broad

thematic engagement related to a range of issues, from development of financial instruments

for financing of urban investment to creation of public–private solutions for mixed-use and

low-income housing. The Bank has been working closely with a range of actors within the

GOC and civil society in what the Santos Administration considers one of five ―engines of

19

growth‖ under the National Development Plan. The Bank‘s work includes financial support

(through the Macroproyectos project); a range of knowledge services and delivery of just-

in-time technical guidance; and the use of the Bank‘s convening power, which included a

visit by a high-level Colombian delegation to Washington, D.C., to help develop options for

establishing tools, such as tax increment financing for developing urban infrastructure and

urban renovation. This engagement is likely to continue in the coming years, especially given

the National Development Plan‘s focus on regional differentiation and development of a

multi-polar growth dynamic led by urban revitalization.

Enhanced Disaster Risk Management

61. Natural disasters are a challenge to sustainable development in Colombia.

Colombia’s high rate of urbanization, compounded by the location of major cities in

high-risk areas, and considerable environmental degradation have brought with them

growing vulnerability to adverse natural events. Population growth and the increasing

concentration of settlements, assets, and infrastructure mean that vulnerability to natural

hazard events is on the rise. This, combined with global climate change and the expected

increased climatic variability, is likely to exacerbate the country‘s exposure to floods,

erosion, landslide, and drought. Annually, Colombia suffers from more than 600 natural

disasters. In the past 30 years, Colombia has experienced 6 major earthquakes, 4 volcanic

eruptions, major landslides, and extensive flooding. Recognizing that disasters are most

effectively dealt with before they happen, Colombia has over the past 2 decades

institutionalized a system for comprehensive disaster risk management that among other

things seeks to reduce vulnerability by investing in risk mitigation, environmental

management, and strengthening the integration of disaster risk management in urban and

territorial planning. Improving Colombia‘s disaster risk management has been a central

theme of the Government‘s overall policy program since 2002. Since 2004, the Government

requested preparation of an APL series to support the implementation of its disaster risk

management policies. Two loans are under implementation.

62. The APL I, which finances investment by the Central Government, addresses the

sector issues through components based on the 5 lines of action — (a) risk identification, (b)

risk reduction, (c) institutional development, (d) risk awareness, and (e) risk financing —

including activities aimed at increasing the effectiveness of investments in disaster risk

mitigation and at addressing the need for contingency plans to cover fiscal shortfalls in case

of a major catastrophe. The APL II, a direct loan to the District of Bogotá, aims at reducing

the vulnerability of the Capital District of Bogotá to adverse natural events, by strengthening

its capacity to manage disaster risks, and by reducing vulnerability in key sectors. The

project will contribute to the District‘s long-term program to save lives and reduce social,

economic, and financial losses resulting from earthquakes, floods, landslides, and other

adverse natural events.

63. In December 2010 during the country‘s worst rainy season in decades, the World

Bank disbursed a DPL with a deferred drawdown option linked to catastrophic events (CAT

DDO of US$150 million) to support Colombia in the face of the humanitarian emergency.

The use of the CAT DDO reflects the Government‘s interest in expanding the use of

innovative financing instruments to develop a comprehensive risk financing strategy. As in

20

other areas, the Bank‘s engagement in disaster risk management spans the broad range of

lending, technical assistance, and knowledge services that support a variety of actors within

Central Government, at the local level and in civil society. Given the focus on disaster risk

issues as a result of the rains and flooding of 2010/2011 and the Bank‘s experience in helping

the GOC effectively, it is likely that additional work in this area will take place that could

include new lending operations for further financing of the APL series, a new CAT DDO,

and subnational operations, including in Barranquilla (a flood protection project), as well as a

continued engagement in technical assistance and other knowledge work. The Bank will also

explore synergies between assisting internally displaced people and people affected by

natural disasters, given the large numbers and geographical coincidences of these two

groups.

Improved Environmental Management and Climate Change Resilience

64. As one of the most biodiverse countries on Earth, Colombia faces serious

challenges related to environmental degradation, which affects public health and

welfare and compromises the country’s potential for sustainable economic growth. An

analysis of the costs of environmental degradation in Colombia indicates that the most

significant costs are associated with urban environmental challenges — inadequate water,

sanitation, and hygiene and ambient and indoor air pollution, mainly from increased child

morbidity and mortality. Colombia also faces great challenges and opportunities on the

―green‖ environment side related to protecting critical ecosystems, developing strategies and

instruments for the sustainable use and protection of its rich forest resources, and taking

advantage of the new climate financing instruments under development. The country‘s

remarkable efforts to protect large amounts of its national territory put it in an excellent

position to emerge as a leader in forest protection and environmental management. The CPS

envisages a broad engagement in integrating environmental principles in sectoral policies (in

particular those of the growth engines, such as infrastructure and mining), urban

environmental management, ecosystem protection, and forestry and water resources

management; this will most likely extend to potentially scaled-up engagement in climate

change mitigation and adaptation, which seems to have taken on a new emphasis under the

Santos Administration. In this context, the Bank is also helping to facilitate nascent work in

developing a strategy for conservation and sustainable development in the Colombian

Amazon, which might focus on supporting the needs of the Amazon‘s indigenous peoples

who are disproportionately affected by poverty and violence.

65. In recent years, the Bank has been actively assisting the Government of Colombia

with a policy-based program of reforms that have been highly successful and have been

accompanied by a program of technical assistance under the Sustainable Development

Investment Project. This programmatic engagement aims to strengthen the Government‘s

program for reducing environmental degradation in Colombia and is likely to continue and

expand under the new CPS. This policy and knowledge engagement has gone hand in hand

with a number of grant-financed and carbon finance activities. These activities include but

are not limited to the Global Environment Facility (GEF) Integrated National

Adaptation Project, a national program to define and implement specific pilot climate

change adaptation; the GEF-funded Colombian National Protected Areas Conservation

Trust Fund Project (soon to enter a stage of additional finance) that supports the

21

development of the National Protected Areas System by consolidating a Biodiversity and

Protected Areas Trust Fund; and the GEF Sustainable Cattle Ranching Project, which

supports the development of silvopastoril cattle ranching systems that greatly improve

environmental management, provide financial and economic benefits to participating cattle

farms, and incorporate an environmental services payment element for development of

critical biodiversity corridors.

66. The IFC sees strong potential demand in Colombia for its suite of climate-related

products. These include credit lines for banks to support energy efficiency projects for

corporate clients as well as direct financing to manufacturers to raise energy efficiency levels

to boost operating margins as well as cutting greenhouse gas emissions. The IFC also intends

to support energy efficient building codes through its investment operations and advisory

service projects.

67. In the new CPS period, the Bank is likely to be deeply involved in environmental

management issues in Colombia, spanning urban environmental issues, forestry, climate

change, biodiversity protection, and water management. And from an institutional point of

view, the integration of environmental principles in sectoral policies could have a

significantly high environmental footprint, unless environmental factors are considered in

their expansion plans. At this moment, activities are ongoing to develop a national low-

carbon growth strategy to address a range of urban environmental issues (including through

operations mentioned above) and to help Colombia take advantage of its vast human capacity

and strong legal and institutional framework in ensuring that the institutional and governance

aspects of environmental management are strengthened.

Inclusive Growth with Enhanced Productivity

68. Colombia also faces the challenge to achieve faster and more inclusive economic

growth. The National Development Plan sets out to increase the country‘s growth rate from

4 to 6 percent, cut the unemployment from 12 to 9 percent, and reduce the Gini coefficient of

income inequality from 0.58 to 0.54. Achieving these challenging targets require policy

efforts geared toward developing the country‘s natural and human resources into such a

pattern that accelerates growth and shares its benefits with broad segments of the population.

In particular, it requires skillful management of risks and fiscal policy challenges associated

with natural resources wealth and careful monitoring and evaluation of policies and programs

conducive to inclusive growth. Transparent and effective public sector institutions (at federal

and subnational levels) and a friendly business environment will also facilitate this growth.

And in support of innovation and entrepreneurship for higher productivity, the development

in the financial sector must deliver efficient and stable services with access for all people.

The Bank is supporting the Colombian Government in this endeavor through an array of

financial and knowledge services discussed below.

22

Table 5: Inclusive Growth with Enhanced Productivity – Results Areas and Outcomes

Improved Fiscal, Financial, and Social Risk Management

69. Colombia has made good progress on the fiscal front over the past decade as

illustrated by substantial reduction in public debt by about ten percentage points since

2002. Yet, as previously discussed, the country faces fiscal challenges related to increased

fiscal reliance on commodity revenues, substantial social security liabilities, and fiscal risks

associated with natural hazards.

70. The Santos Administration is pursuing fiscal reforms aimed at addressing some of

these challenges. A new fiscal rule sets a deficit target for 2014 and commits the Government

to undertake a medium-term fiscal adjustment of about 1.5 percentage points of GDP. The

rule targets a Central Government structural balance by 2022. The fiscal rule legislation also

introduces a savings and stabilization fund to reduce budget volatility associated with an

increased fiscal reliance on commodities revenues (primarily oil, coal, and metals). A reform

of the royalties system, which directs revenues from natural resources exploration toward

subnational entities, complements these efforts by introducing a stabilization fund at the

decentralized level. Congress has also approved an amendment to the Constitution that

introduces fiscal sustainability as a criterion. The Government has also taken measures to

reduce social security spending through legislative and administrative measures in the health

sector, and it is preparing a financing strategy to mitigate fiscal risks from natural hazards.

The Government‘s fiscal management program represents a substantial effort in tackling

Improved Fiscal, Financial and

Social Risk Management

Improved Public Sector

Management and Equity and

Efficiency of Economic Policies

Improved Productivity and

Innovation

Outcome 1: The Central

Government meets the structural

fiscal deficit target for 2014 (2.3%

of GDP or less).

Outcome 2: Financial instruments

to mitigate natural disaster risks

have been implemented by 2013.

Outcome 1: Enhanced public sector

efficiency and transparency by

strengthening and expanding the

individual management information

systems that are the building blocks

of an integrated, performance-

informed management model.

Outcome 2: Management capacities

at subnational level of governments

are improved and have a positive

impact in the quality of expenditures

and the provision of services.

Outcome 3: Improved quality and

accessibility of the evidence base for

decision making and particularly for

policies and programs related to

poverty reduction.

Outcome 4: Improvement in the

movement of cargo in and out of

Colombia by enhancing automation

through the VUCE system and

improved handling of cargo at ports

through risk-based policy and

procedures.

Outcome 1: Strengthened capacity

of COLCIENCIAS to promote

human capital for knowledge

economy, research and development

and innovation.

Outcome 2: Raised awareness of

science, technology, and innovation

in the Colombian society.

Outcome 3: Improved regulations

for business and property

registration, and reform the

legislation for secured transactions

and the collateral registry.

Outcome 4: Higher financial

inclusion measured by increased

percentage of the population with a

deposit account.

23

these challenges. Further progress, for instance in reforming the pension system, would

nonetheless be warranted even following successful implementation of the reform program.

71. Colombia has focused for many years in managing the risk reduction of its debt

portfolio through a substantial increase in the share of local currency and fixed interest rate,

the extension of maturities, and the smoothing out of the debt redemption profile. To meet

the goals of its debt management strategy, Colombia has taken full advantage of IBRD

financial products, both at the federal and subnational levels. As Colombia proceeds with

active liability management of its debt portfolio in the future, it is expected that the country

will continue using the embedded conversion options of IBRD loans to fix the interest rate or

convert the loan currency into Colombian Pesos. In addition, Colombia has signed a Master

Derivatives Agreement with IBRD that gives it access to a wider menu of financial products

to manage risks related to commodity, weather, and natural disasters. The Master Derivatives

Agreement would also help hedge the currency exposure generated by bond issuance in

international markets in different currencies (e.g., in Japan). Subnationals, which have

revenues in local currency (e.g., Bogotá, ICETEX), are also expected to continue with the

practice of converting their loan disbursements into Colombian Pesos.

72. Colombia is in the process of developing a broader approach to sovereign risk

management. The country lacks a comprehensive fiscal risk analysis of the balance sheet as

well as a specific framework for the design and implementation of a holistic risk

management strategy capable of deliberating between (a) risk absorption capacity, (b) risk

retention and transfer, (c) policy advice and institutional capacity for managing risk, and (d)

potential financial products available for strategy implementation. Colombian authorities and

the World Bank have enjoyed a long-lasting and fruitful partnership on issues relating to

sovereign debt management in general and the reduction of financial vulnerabilities in

particular, with Colombia being a regional leader in the use of the Bank‘s risk management

products and services. As part of this ongoing partnership, the World Bank is assisting the

Government of Colombia as it endeavors to develop and implement a more comprehensive

sovereign risk management agenda (see Annex E for details).

73. The World Bank also supports the Government‘s fiscal management program through

a multi-sectoral, programmatic package of financial, knowledge, and convening services.

Financial services include a DPL series (FY12-13) that support greater budget predictability

and stability, improved management of public sector contingent liabilities, and improved

disaster risk financing management. Knowledge services range from economic modeling

support to commodity risks management. In the area of convening services, the Bank

organizes various seminars with high-level government officials on royalties‘ reform,

disaster risk management, and management of public sector liabilities.

74. The Bank is also supporting efforts to strengthen the Colombian financial sector,

which is considered underdeveloped. Data shows that different measures of financial

system development are below the expected medium value given GDP per capita, size and

demographics and is also below the regional media for LAC countries. Sound financial

sector development is necessary to fund productive investment, to increase productivity, and

to sustain growth. To this end, there is work underway to strengthen financial sector

oversight, develop the financial sector, and improve access to finance. In the area of financial

sector strengthening, the Bank plans to provide knowledge and advisory services in forms of

(a) a Report on the Observance of Standards and Codes (ROSC), with its recommendations,

24

including financial architecture, regulation, and supervision; (b) a review of the pension

system; (c) continued ongoing work on capital markets development through the Efficient

Securities Markets Institutional Development (ESMID) program. Furthermore, work to

strengthen financial literacy and consumer protection is underway namely through analytical

work to understand the financial management practices of the Colombian population and

technical assistance to the financial sector on fee structures. In social risk management, the

Bank will provide advisory services to improve the Government‘s ability to monitor social

welfare impacts of crises (and related responses) at the national and local level. The Bank

will also step in to strengthen the capacity of the Government and communities to prepare for

crises. This work will include development of a management information system for social

risk management and approval of a SFLAC recipient-executed grant to strengthen social risk

management capacity at the Department of National Planning (DNP).

Improved Public Sector Management and Equity and Efficiency of Economic Policies

75. Colombian authorities have been focused on enhancing the equity, efficiency,

and effectiveness of economic policies and public administration for more than two

decades. Progress has been notable under the last two administrations, and the political

commitment was renewed by the new Administration that put enhancing public sector

management as a top priority in the National Development Plan. The Bank supports the GOC

Good Governance and Decentralization Programs with specific focus in the national

government‘s management institutions, the decentralization framework, and the governance

and public management capacities at subnational level of government.

76. The Bank‘s support in this area include the Consolidation of National Public

Management Information Systems Project that aims to improve transparency and inter-

operability of the Government‘s main management information systems. The Subnational

Institutional Strengthening Investment Loan, planned for FY12, will support the

implementation of the decentralization reforms and the Government‘s strategy to improve

governance and institutional capacities in subnational governments. The IFC hopes to expand

its royalty management program in Colombia. There are three active projects in the country

that are assisting local governments to improve transparency and accountability in their use

of payments from extractive industry operations.

77. Knowledge and advisory services will seek to strengthen territorial development

through improved management capacities in departments and municipal governments.

Bank assistance will focus on strengthening human resource management, financial

management, and coordination with local organizations (public, private, and civil society).

Specific activities include the design and piloting of the Rapid Assessments and Action

Plans Methodology, which aims to improve management capacities in departments and

municipal governments. In addition, a diagnostic and strategic planning tool based on the

Capacity Development and Results Framework is being applied to assess and address

institutional capacities of demand and supply-side institutions at the subnational level. The

Bank also provides advisory services on the implementation of the Citizen’s Visible Audits

Methodology, which promotes civil society participation and control in the execution of

public investments. The regional study ―Fiscal Federalism/Decentralization in LAC” also

contributes to generate and share knowledge on good practice related to intergovernmental

25

arrangements. Convening services include organization of workshops on mechanisms to

improve national government tools to assess public management capacities at subnational

level and to regulate and supervise the delivery of services by subnational governments; and

the exchange of international experiences on policies to improve coordination among central

and subnational governments as well as on budget management to improve expenditure

efficiency.

78. In the past few years, Colombia has also demonstrated a good track record in

implementing public financial management. The Colombian PFM systems at central level

perform close to international good practice, albeit with a few areas needing further

improvement. The Bank has supported strengthening of the financial management and

oversight systems in the country by using different financing instruments and advisory

services to the Ministry of Finance and Public Credit, Department of National Planning,

Supreme Audit Institutions, and National Accounting Office. In accordance with the Bank

and regional governance and anti-corruption strategies, the Bank‘s financial management

support to increase good governance and transparency during the CPS period will focus on

(a) increasing reliance in PFM country systems (strengthening the capacity and independence

of the Supreme Audit Institution); (b) increasing transparency at national and subnational

levels by continuing with provision of advisory service on financial and fiscal reporting of

public accounts; and (c) assessing fiduciary risks for project preparation and implementation

support recommending appropriate strengthening mitigating measures.

79. The Bank is also planning to continue to support the Government in establishing

an enhanced and effective public procurement system and building better capacity of

its institutions. Both at the national and subnational levels, the Bank will provide just-in-

time policy advice and financial support to assist the Government in designing and

implementing key reforms in public procurement. These may include (a) the support to

implementation of a procurement strategy; (b) issuance and implementation of an improved

procurement law and regulations; (c) creation and support of a regulatory body in the context

of an inter-institutional coordination effort; (d) transformation and roll-out of the new e-

procurement system (SECOP) that promotes transparency and competition in public

procurement; and (e) implementation of cost reduction strategies (price benchmarking,

consolidation for economies of scale). Furthermore, the Bank plans to provide technical

assistance to the Government to evaluate specific sectors and government programs to

uncover and deter public procurement deficiencies that may limit public services. The Bank

could also help to strengthen inter-institutional coordination and information-sharing systems

that will contribute to strengthening internal checks and balances.

80. To address the challenges of low accountability and weak basis for managerial

decisions, the Strengthening Public Information, Monitoring and Evaluation for Results

Management Project has been helping the Government of Colombia to increase the use of

information for policy design and accountability in a cost-effective way. The project supports

the GOC SINERGIA program, which includes: (a) a system of monitoring indicators

throughout the public sector and linked to the national budget (SISMEG); (b) a system of

evaluation of public policies (SISDEVAL); and (c) a network of evaluation agencies

throughout Colombia (RED de Evaluación), which includes support to subnational

governments and therefore would be particularly attuned to the new Government‘s priority

for decentralization. The Bank will continue to provide technical support to the National

26

Planning Department in consolidating results-based public management and rigorous

evaluation of public programs and policies.

81. The Bank also plans to provide analytical and advisory services to improve the

equity and efficiency of economic policies, by improving the quality and accessibility of

the evidence-base for decision-making. The main emphasis of this work is impact

evaluation and assessment of economic policies and programs that contribute to poverty

reduction, stronger labor markets, upward mobility, and gender. The Bank will continue

supporting GOC efforts to improve inputs and methodology for poverty measurement

through technical assistance for the MESEP and the new poverty committee and to improve

household income measurement. It will also provide support to analyze the impact of high

food prices on poverty through (a) a joint technical note with Department of National

Planning on the impact of food prices on poverty; and (b) an approved SFLAC recipient-

executed grant that will support the ability of Department of National Planning to monitor

the impact of food prices on poverty and evaluate its main determinants. The Bank will also

support GOC efforts to measure and track inequality and upward mobility, and to better

understand means to improve access to critical goods and services that can improve equity,

mobility, and the strengthening of the middle class. In particular, the Bank plans to undertake

the following activities: (a) Colombia Equity Assessment; (b) analytical work on Colombia

as part of the Regional Mobility Flagship; and (c) approval of a recipient-executed trust fund

for statistical capacity for the design on longitudinal surveys in Colombia (DNP/DANE).

Improved Productivity and Innovation

82. The Government of Colombia seeks to strengthen productivity, innovation, and

entrepreneurship through increased coverage and better quality of financial and

education services, and stronger national systems for innovation and technology

transfer, with a special focus on improving productivity and innovation in small and

medium-size enterprises and the agricultural sector. The Government has also

emphasized its commitment to scale up investments in science, technology and innovation,

as reflected in the National Development Plan and the ―Plan Vive Digital‖.

83. To support innovation, competitiveness, and entrepreneurship, the Bank will provide

a package of financial, knowledge, advisory, and convening services. The planned

Innovation, Competitiveness and Entrepreneurship Investment Loan (FY13) will focus

on the following priorities: (a) strengthen the national system for innovation and technology

transfer; (b) strengthen financial mechanisms to support innovation (Bancoldex and Fondo

Emprender); (c) strengthen the intellectual property rights protection system; (d) strengthen

regional competitiveness; and (e) support technology transfer diffusion and other

mechanisms seeking to facilitate productivity improvements in small and medium-size

enterprises (SMEs). This loan builds on the Science, Technology, and Innovation (STI)

Program that is currently under implementation and enhances the competitiveness and

productivity of Colombian firms to foster sustainable growth and reduce economic

disparities. The Program links specific STI investments to promote knowledge generation

and absorption in Colombia to the national strategy for competitiveness and productivity and

to the development of priority industrial sectors in relation with the Productive

Transformation Strategy. Potential Bank knowledge and advisory services will broaden

27

support to include (a) reviewing the innovation system with focus on designing alternative

models for channeling resources toward regional innovation projects; (b) providing

international experiences on piloting projects to increase SME productivity and promote

technological transfer; and (c) conducting cluster/value chain analysis. The proposed Bank

support in this area will also focus on improving productivity of the service sector with

technical assistance on the design of a service sector survey focused on the informal sector

and analytical work on measurement of productivity in the service sector.

84. The support for competitiveness and productivity growth are key features of the

IFC strategy for Colombia as well as for the entire Latin American and Caribbean

region. In addition to financing innovative companies and supporting efficiency gains, IFC

also expects to increase its financing for Colombian companies investing overseas, as well as

backing inward investment by companies based in developing countries. Outward investment

by Colombian businesses enables them to achieve economies of scale needed to compete in a

globalized marketplace, manage risk by reducing reliance on a single market, and increase

their exposure to international best practices.

85. The Bank plans to improve firm productivity growth through knowledge and

advisory services to improve access to financial services. In particular this work will be

structured around (a) expanding the use of electronic money and mobile banking, (b)

supporting financial literacy, and (c) strengthening consumer protection. The IFC will

continue ramping up its SME financing by providing dedicated credit lines to client banks for

onlending to client companies. Although Colombia has made progress in strengthening its

business regulatory environment, investment climate obstacles remain. Colombia‘s business

entry and exit procedures are less efficient than those in industrialized countries and systems

for secured transactions and collateral registration can be improved. The WBG plans to

continue its technical assistance for improving the business regulatory environment,

including advising on the drafting of a new law for secured transactions and the creation of a

unified collateral registry. In addition, work will continue to simplify the areas of business

and property registration, and construction permits. The WBG has three investment climate

operations in Colombia at present.

86. The Government has also requested the WBG to implement in 2012 the third Doing

Business subnational study in collaboration of the Department of National Planning. The

project goal is to promote competition for a better business environment in Colombia by

benchmarking business regulations across Colombian cities and comparing them with 183

economies.

87. The IFC has also developed a vibrant microfinance industry in Colombia both

through investments and advisory engagements. Microfinance is an important part of IFC‘s

financial markets strategy in Colombia for its impact on low-income communities, women,

and minorities. The IFC hopes to support the expansion of mobile banking services in

Colombia. It also hopes to help provide insurance coverage for low-income groups through

investments in second-tier insurance companies. The IFC microfinance portfolio consists of

seven projects totaling US$40.9 million, which accounts for 10 percent of its financial

markets portfolio in Colombia. The IFC advisory services also hopes to increase its

engagement with the microfinance sector, assisting lenders to transition from NGO status to

becoming regulated financial institutions. The IFC objectives for the microfinance sector in

Colombia include: (a) increasing access to finance through programs aimed at micro, small

28

and medium-size enterprise; low- and middle-income segments; rural populations; women;

and the underserved; (b) lowering intermediation costs through improved risk management

and greater operating efficiencies; (c) deepening, broadening and diversifying financial

sector participation to achieve greater financial sector stability; and (d) targeting programs in

insurance and low-income housing.

88. The Bank is also likely to play an important role in the area of infrastructure for

growth and competitiveness during the CPS period. An initial activity, which emerged

from the policy notes undertaken during the political transition period, has been launched to

provide technical assistance in the redesign of the National Institute of Concessions, and the

development of a new concessions entity. It is likely that this work will be complemented in

the near future with further knowledge and convening activities, in conjunction with the IFC,

related to the institutional and legal issues related to public–private partnerships in the

infrastructure sectors. The IFC has worked successfully with the Government on structuring

a PPP concession for the 1,071-kilometer highway, Ruta del Sol, and expects that close

engagement with the authorities will lead to more PPP-related activities at national and

departmental levels.

89. Like infrastructure, another of the GOC “engines of growths” is mining and

extractive industries. The Bank is now working with the Ministry of Mines and Energy

through technical assistance activities related to improving the management of mining

concessions information, including the social land environmental aspects of extractive

industries. Given the expected continued importance of extractive industry growth in

Colombia, it is likely that this will remain an important area in which the WBG maintains an

engagement. As mentioned above, IFC advisory services expect to expand its royalty

management program in Colombia to assist communities to better manage revenue from

local mining operations.

90. The World Bank is also focusing on improving competitiveness and productivity

of the agriculture sector. With Bank support in 2002, the Government started a small pilot

program called Rural Productive Partnership, which increases rural competitiveness and

builds up rural entrepreneurship in a sustainable manner. The program supports demand-

driven partnerships between organized small producers and the commercial private sector

with the objective to improve small producers‘ incomes through their participation in high-

value chains. To date, the program has supported 213 partnerships. The Government intends

to scale up the program by adding 640 new partnerships by the end of 2014. The Bank is

planning to help the Government to scale up this program under the title Small-holder

Agriculture Competitiveness. The scaling up is likely to include linkages to other key

policy programs in the areas of land restitution, agricultural innovations, as well as

agricultural risk mitigation and risk management, as needed to improve the competitiveness

of small-holder agriculture. The Agricultural Transition Project, currently under

implementation, aims to strengthen the national agricultural science and technology and

sanitary and phytosanitary systems by supporting joint participation of the public and private

sectors through production chain mechanisms, thereby contributing to the competitiveness of

Colombian agriculture and improving the accessibility of export-potential products to

international markets. Land management and administration might also be an area in which

the Bank could work under this CPS. The IFC may also engage with selected agribusiness

29

clients to raise yields and productivity through investment projects, advisory engagements, or

a combination of both.

91. The Agricultural Transition Project is appropriately complemented by the Science,

Technology, and Innovation Project. The Bank builds on the well-established cooperation

with the Government of Colombia in the STI and tertiary education sectors. The project‘s

main objective is to increase access, quality, and coherence in the tertiary education

subsector. Colciencias (Departamento Administrativo de Ciencia, Tecnología e Innovación)

was a co-implementing agency for this loan, which financed national doctoral scholarships,

the acquisition of robust research equipment, and researchers‘ mobility programs. The

project enhances the competitiveness and productivity of Colombian firms to foster

sustainable growth and reduce economic disparities. The project links specific STI

investments to promote knowledge generation and absorption to the national strategy for

competitiveness and productivity and to development of priority industrial sectors under the

Productive Transformation Strategy.

C. The WBG’s Indicative Program

92. In terms of financial services, the Government has indicated financing expectations of

about US$1.1 billion in FY12. The FY11 financing program was lower than in recent years

as a result of the Presidential transition period. For FY13-16 the lending program is expected

to be US$800–1,080 million per annum. These are only indicative lending amounts. Actual

delivery of the lending program will depend on Colombia‘s performance, IBRD lending

capacity, demand from other borrowers, global economic developments, and disbursement

profiles that keep exposure within the country limits.

93. Trust funds will continue to be an integral part of the Bank‘s engagement with

Colombia. As trust fund resources are not predictable for the purpose of the CPS, the WBG

will ensure that activities financed by trust funds follow the thrust of this strategy in

agreement with the Government counterparts.

94. The CPS thematic areas will be managed under an enhanced thematic business model

approach. This approach aims to improve the impact of the Bank‘s engagement in Colombia.

Financial, knowledge, and convening services are managed as a comprehensive package of

support under each theme to deliver timely and flexible development solutions.

95. The WBG intends to monitor CPS results via (a) regular project/program supervision;

(b) annual reviews of programmatic knowledge and convening services; (c) annual Country

Portfolio Performance Reviews; (d) client demand and feedback, in particular with respect to

knowledge and convening services; (e) Bank internal independent evaluations; and (f) the

mid-term CPS Progress Report.

30

Table 6: Indicative World Bank Financial Services (FY12-13)

FY-12 Lending Program Commitment US$ million

Urban Transport (SIL) 350

CAT DDO II 150

Sustainable Development (TA-AF) 10

Fiscal Sustainability and Growth Resilience (DPL I) 300

Sub-National Institutional Strengthening (SIL) 150

Small-holder Agriculture Competitiveness (SIL) 150

Total: 1110

FY13 Lending Program Pipeline

Education Quality (P4R) 150

Social Safety Net III (SIL) 150

Disaster Vulnerability Reduction Phase 2 APL1 100

Barranquilla Flood Protection (SIL) 100

Sustainable Development (DPL) 100

Fiscal Sustainability and Growth Resilience (DPL II) 200

Innovation, Competitiveness, and Entrepreneurship (SIL) 100

Total: 900

Table 7: Indicative WB Knowledge and Convening Services (FY12)

FY12

Enhanced Social Promotion (P123158) (Programmatic)

Improved Opportunities in Education (P123144) (Programmatic)

Improved Performance of Social Services (P123301) (Programmatic)

Urbanization Review (P121640) (Programmatic)

Support to Infrastructure Concession Entity Restructuring (P125932)

Low-carbon Development (P124909)

Strengthening Environmental and Natural Res. Institution (P123864) (Programmatic)

Financial Sector Work (Programmatic)

Poverty, Labor Markets, Inequality and Monitoring and Evaluation (Programmatic)

Strengthening Public Sector (Programmatic)

Institutional & Mineral Rights (P125514)

Productivity, Competitiveness and Entrepreneurship (P126865)

Financial Capability Assessment (P122698)

D. Development Partner Collaboration and South-South Knowledge Exchange

96. Joint work with other development partners, both the Inter-American Development

Bank (IDB) and Corporación Andina de Fomento (CAF), has entailed inter-disciplinary

activities from conditional cash transfer (CCT) experiences to the harmonization of

procedures for the STI project; energy-generation deals with IFC; and collaboration for

completion of the NUTP system. Other bilateral donors have worked closely with the Bank

providing grant funds for programs that are ranging from youth promotion, gender equality,

and institutional strengthening to flood management and public transport.

31

97. South-South Cooperation (SSC) is an important national priority for Colombia.

Colombia‘s National Development Plan identifies international relevance through South-

South Cooperation as a key cross-cutting theme, and the Government has striven to

strengthen the planning, funding, and implementation of South-South Knowledge Exchange

(SSKE) while promoting Colombia as a potential SSKE partner regionally and globally.

Colombia and Indonesia co-chair the Task Team on South-South Cooperation, a working

party of the OECD/DAC and an international coalition of countries, multilaterals, donors,

academic institutions, and other stakeholders that aim to develop good practice and policy

guidance for SSC activities. The World Bank Country Team is looking to include an SSKE

component in its capacity development initiatives in Colombia and is promoting Colombia‘s

participation in a WBI Pilot Brokering Mechanism supporting SSKE. The pilot aims to help

countries document their knowledge-sharing needs and facilitate matches for exchanges

between developing country partners. (Annex F provides further details regarding

Colombia‘s role in SSKE and the Pilot Brokering Mechanism.)

98. In addition, the Accra Agenda for Action created a mandate to review the SSKE and

Triangular Cooperation. Colombia is the leader of this new initiative as a long-standing SSC

practitioner. The public mass transit system in Bogotá (Transmilenio), which has been

replicated in many countries, is a good example of technical cooperation and mutual learning

and its contribution to development.

V. RISKS

99. Colombia is vulnerable to commodity price shocks and a deterioration of

external financing conditions. Commodity exports accounted for 63 percent of export

revenue in 2010 while 73 percent of foreign direct investment inflows are in commodity-

related projects (mainly oil). As a result, an adverse shock to oil and other primary exports

(e.g., coffee) could result in a significant increase in Colombia‘s financing needs. A sudden

deterioration of external financing conditions would also affect Colombia. Tighter global

financial conditions would lower the inflows of private capital envisaged in the

macroeconomic projections; and public external financing conditions also could be affected,

even if the Government was to maintain access to international markets at favorable rates,

possibly creating debt roll-over difficulties. The two-year US$6.2 billion (SDR3.87 billion)

arrangement under the IMF Flexible Credit Line, approved in May 2011, will mitigate these

risks continuing to provide space for policy flexibility while bolstering Colombia‘s access to

international markets if tail risks were to materialize.

100. Another external economic risk derives from a slower-than-expected global

recovery. Earlier fears of a double-dip recession have not materialized, but there are

important downside risks. Future developments in the United States, in particular, are of

importance to Colombia. Substantially higher oil prices or a further decline in domestic

housing prices could dampen confidence and consumer spending in the United States. This

would reduce demand for Colombian exports. Higher global prices for Colombia‘s

commodity exports will mitigate this impact, but the recovery of non-traditional exports

(e.g., flowers) may be slower than expected. The Bank and the IMF are maintaining an on-

32

going policy dialogue with the Government on macroeconomic policy issues, which may

help detect early potential threats to Colombia‘s growth.

101. Rising food prices. Since end-2010, global food prices have risen substantially and

are now at levels comparable to the 2008 crisis with a risk that they may rise even further

owing to global market conditions. High food prices raise macroeconomic as well as social

concerns. Higher global prices are, to some extent, transmitted to domestic food prices,

which in turn generate inflation. If the Central Bank evaluates that the price effect is

permanent or that it affects expectations for inflation, then it may decide to tighten monetary

policy, which would dampen the economic recovery. Higher food prices directly affect

poverty given that a relatively higher share of household consumption is devoted to food

expenses among the poor. The Government of Colombia can mitigate this impact through

social programs, including an increase in the amount of conditional cash transfer.

102. Policy slippages in implementing fiscal reforms. Given the high level of ambition

for the fiscal reform agenda, there is a risk of slower progress in politically contentious areas.

This unfortunately has been frequently the case in Colombia when dealing with structural

fiscal reforms in the past (e.g., pensions, health care). This would call for frontloaded action

in key policy reform areas that signal commitment to strengthening fiscal institutions and

reducing fiscal risks. Moving forward with the most contentious issues first would signal

strong commitment to reform and mitigate some of these risks. The Government has, to some

extent, followed this strategy, for instance, by bringing forward the royalties reform and

frontloading the fiscal adjustment. The Bank will stay engaged through its programmatic and

comprehensive engagement in the fiscal reform program.

103. Sustainability of reform efforts in disaster risk management. In the aftermath of

the La Niña event, natural disaster risk management moved to the top on the political agenda.

The Government designed an effective post-disaster financing mechanism; included the

theme in the new National Development Plan; and between December 7, 2010 and January 6,

2011, the issued several decrees to improve the country‘s future crises preparedness. While

there are important indications that Colombia is heading toward an improved institutional

framework, there is a risk that reform attention will be diverted as the memory of the recent

disaster fades and other priorities rise up the political agenda. The Government has asked the

Bank to be its strategic partner in moving the reforms forward, and the Bank can try to

mitigate the risk by reminding the Government of importance of the agenda.

104. Working at subnational level. As the Bank intensifies its engagement at the

subnational level, fiduciary and safeguard risks will increase — as will the costs of attendant

mitigation mechanisms. The Bank may also face potential reputational risks as it expands its

support into regions where local governments might be subject to the influence of illegal

groups and other non-state actors. The Central Government‘s commitment to work with the

subnational authorities and the Bank to embed strong fiduciary measures will help offset

these potential risks.

105. Promoting peace, deposing violence. Peace has not been secured throughout the

entire country. Poverty, corruption, and the drug trade remain significant challenges. A rise

in urban crime and violence from illegal groups tied to the drug trade — some of which have

been formed by former paramilitary combatants — represents an increasing security

challenge and will require more attention from the Government during 2011–16.

33

Strengthened drug cartels in Mexico and Central America working closely with Colombian

suppliers also impose a challenge for the authorities in the years to come. Beginning in early

2000, the Bank has been closely involved with the Government in a range of activities

related to community-driven conflict resolution and management as part of the peace pillar in

the previous CPS. These activities are likely to continue in coming years as the new

administration has broadly adopted policies to further promote peace.

34

Annex A: CPS Results Framework

Country Development Goals

(from NDP) Issues and Obstacles CPS Outcomes Milestones

WBG Program (and

Partners)

Expanding Opportunities for Social Prosperity Enhanced Social Promotion and Improved Citizens Security

Social Protection: Families

graduated from the Unidos

Program that meet conditions to

not be in Extreme Poverty

Baseline: 0 (2011) Target: 350.000 (2014)

Reduction in overall and youth unemployment rates:

Baseline (2010): 12.0% (overall) and 21.6% (youth)

Target (2014): 8.9% (overall)

and 16.1% (youth)

1. Weak coordination among

programs for poverty reduction

2. Barriers to create formal

employment, including high labor

costs, relevance of skills, complex regulatory framework to establish

businesses

3. Deficiencies in enforcement of

basic rights of IDP‘s

1. Better coverage of Unidos

program (merger of two key

poverty reduction programs)

Baseline: 0

Target: 1.5 million

2. Increase in the coverage of

municipalities that offer active labor market policies to enhance

labor productivity and reduce

barriers to the employability of the poor

Baseline: 0 Target: 300 new municipalities

3. Increase in number of land

rights protected of internally

displaced people who abandoned

their land due to forced displacement

Baseline: 83.450 households

(2.525.566 hectares) protected (2008)

Target: 219.450 households X

hectares (2014)

1. Merger of CCT (Familias en

Accion) and social promotion

strategy (Juntos) into a single

program (Unidos)

Baseline: Programs operate separately

Target: Programs merged

2. Design and implementation of

the program Trabajemos Unidos,

to provide active labor market policies for the poor.

Baseline: 0

Target: Program created and

implemented at pilot or national

scale

Financial Services:

Lending – Ongoing:

Support for the Second Phase of the Expansion of the Program of Conditional Transfers-Familias en Acción Project – Social Safety Net II(P101211) Peace and Development (AF) (P051306) Lending – Pipeline:

Social Safety Net III (SIL) (FY13) (P104507)

Knowledge Services:

Enhanced Social Promotion (P123158) (Programmatic)

Financed by grants - Ongoing:

Empowering young women affected by violence (JSDF, TF093829/TF093830) Soccer together (JSDF, No-code yet) Peaceful Dispute Resolution Services for the Poor (JSDF, TF091176, Recipient) Gender and IDPs (GENTF, TF095198) Protection of Land and Patrimony of IDPs Phase 3 (SPBF, TF094596) Access to Opportunities for Youth (JSDF, TF093141) Labor Reforming Cajas de Compensación Familiar (CCF) (PSIA, TF097240) Institutional Community Strengthening for Local Governance (JSDF TF091174) Youth Reintegration Project (Colegio del Cuerpo) (IF-P095598-CAH-BB)

35

Country Development Goals

(from NDP) Issues and Obstacles CPS Outcomes Milestones

WBG Program (and

Partners) Study on conflict and education resilience in Antioquia as part of the

global study ―Towards a Tool to

Assess Violent Conflict and Educational Fragility/Resilience in

Conflict-affected and Post-Conflict

Countries‖(Fragile States Program – HDNED) Financed by grants - Pipeline:

Strengthening Human Rights to Basic Social Services in Peace and Development Zones (NTF, TF096627)

Convening Services:

Financed by grants:

Community Practice CCTs South-south transfer - labor Social network on health financing Natl. Tech. Comm. - IDP‘s Assets Protection Program Human Rights-Peace & Dev. Dialogue Support for South-South Dissemination on DDR (WBI initiative IFC Possible direct lending to and/or equity investment in microfinance institutions. Advisory services support for transitioning microfinance lenders to regulated institutions Low-income housing finance.

Improved Opportunities In Education

Human Capital Formation: Education Coverage (Higher)

Baseline: 35.3% (2011)

Target: 50% (2014)

1. Subpar learning outcomes compared to other countries in the

region.

2. Pronounced disparities in

access and quality of secondary

and tertiary education.

1. Increase in enrollment rates (primary and lower secondary;

and secondary education) of

students from poor and rural

households (31 poorest territorial

entities, including 17 departments

and 13 municipalities).

Baseline:

NER primary and lower secondary: 90.21%

1. Enhanced policy framework for quality of education

Baseline: Current framework

Target: Revised framework

2. Improve national system for student assessments

Baseline: Current system Target: Transformed system

Financial Services:

Lending – Ongoing:

Rural education project (APL II) (P082908). Antioquia upper secondary education project (P052608) Second student loan project (APL II)-(P105164). Lending – Pipeline:

Education Quality project. (FY13)-(P106693)

36

Country Development Goals

(from NDP) Issues and Obstacles CPS Outcomes Milestones

WBG Program (and

Partners) NER upper secondary: 30.84% Target:

NER primary and lower

secondary: 94% NER upper secondary: 35%

2. Increase in tertiary education enrollment of students from poor

households

Baseline: 75,000

Target: 150,000

Risk Management:

Local currency financing for ICETEX, Antioquia Knowledge Services:

Improved Opportunities in

Education (P123144) (Programmatic)

Benchmarking of basic education system Joint OECD/WB Review of the national tertiary education system Joint OECD/WB Review of the tertiary education system at the regional level (Antioquia)Review student loan and scholarship programs Diversify ICETEX financing portfolio Technical and Vocational Education Policy Note Financed by grants – Pipeline:

Education Quality Report (ICFES)-(P106710) Convening Services:

SSKE CO- Morocco on Measuring Learning outcomes in Higher Education IFC ongoing and potential new projects in technical and vocational adult education Piloting financial literacy programs.

Improved Performance of Social Services

Early Childhood Attention to

Vulnerable Children Baseline: 566,429 (2011)

Target: 1,200,000 (2014)

Access to Health: Coverage of

Subsidized Regime Baseline: 90.2% (2011)

Target: 100% (2014)

1. Fragmented service delivery

systems

2. Blurred institutional mandates,

fragmented financing and

information systems and weak

accountability arrangements

1. Strengthened information

systems to monitor service delivery and strengthen

accountability in health, education

and ECD

Baseline: Multiple information

systems do not effectively capture productivity and quality of

services in health, education and

ECD

Target: Unified information

1. Develop information system for

ECD

Baseline: Information system to

be developed

Target: Plan for ECD information

system developed

2. Strengthen management and

information system of the health

insurance system for the poor

Baseline: Reform strategy lacking

Knowledge Services:

Improved Performance of Social

Services (P123301) (Programmatic)

Financed by grants - Ongoing: Avian Influenza (TF 098473) Financial Capabilities and Education Measurement Project (FLIT TF097524) Financed by grants - Pipeline:

Implementing the right to health (NTF, TF096788) Strengthening Governance of Early

37

Country Development Goals

(from NDP) Issues and Obstacles CPS Outcomes Milestones

WBG Program (and

Partners) systems capture productivity and quality of services in health,

education and ECD

Target: Reform strategy developed

3. Strengthen information system of education sector

Baseline: Reform strategy lacking

Target: Reform strategy

developed

Childhood Development Programs (SFLAC TF099190) Colombia enhancing governance, transparency and accountability in education (IDF grant) Convening Services:

Financed by grants:

South-south transfer health sector regulation Community of Practice ECD North-South transfer ECD South-South transfer ECD ALAS – Colombia University and WB partnership on ECD

Sustainable Growth with Enhanced Climate Change Resilience Improved Sustainable Urban Development

Cities with urban mobility solutions in place

Baseline: 10 (2011) Target: 30 (2014)

Construction Dynamic-# of houses/apartments initiated in the

2010-2014 period)

Base: 560.300

Target: 1.000.000

1. Infrastructure investments and quality of urban services has not

kept up with the growth of cities

2. Land management and housing

development for low-income

segments of the population remains a critical challenge

1.Increased population benefitting from improved transportation

services in large cities;

Baseline: 460,000 (2011)

Target: 1,800,000 (2014)

2. Increased population benefitting

from improved transportation services in medium-sized cities;

Baseline: 0 (2011) Target: 150,000 (2014)

3. Improved institutional capacity

of the central Government to plan and deliver transportation services

Baseline: n/a (2011)

Target: Improved (2014)

1. Number of low income beneficiaries with access to

housing units under

Macroproyectos subprojects, The target would be 40,000

Baseline: 0 (2011) Target: 40,000 (2014)

Financial Services:

Lending - Ongoing:

La Guajira Water and Sanitation Proj (P096965). Bogota Urban Services AF (P074726) Solid Waste Mgmt Project (P101279). Macroproyectos Project (FY11)-(P110671) Integrated Mass Transit Systems (P082466 / P114325) Rio Bogota Project (FY11)-(P111479) Lending - Pipeline:

National Urban Transport (FY12) (P117947)

Knowledge Services:

Financed by grants - Ongoing:

Strategic Basin Planning for the Rio Bogota (WPP, TF095149) Regulatory Aspects of Transport (SFLAC, TF096162, Recipient) Nordic Fund for Universal Access to BRTs (NF, P114302, Recipient) Pilot Impact Evaluation Pereira BRTs-(NTF, TF096953, Recipient)

38

Country Development Goals

(from NDP) Issues and Obstacles CPS Outcomes Milestones

WBG Program (and

Partners) Metro Study, Integration Public Transit Syst., SNTA (3 cities), and Comm. Campaign BRT Impl.(PPIAFs ,TF074726, Recipient) - Integration of Public Transit Systems (SFLAC, TF071296) - Cartagena Bus Rapid Transit System ( P11517, CF) Analyze the Experience of Specialized Water Operator in Colombia (SFLAC TF098814) Colombia Low Carbon Study (SFLAC TF098916) Cities Alliance-Macroproyectos de Interes Social Nacional (CITIES TF098963) Institutional Strengthening and Capacity Building to Support the Rio Bogota Environmental (SFLAC TF097840) Financed by grants - Pipeline:

Public Transport Regulatory Framework (SFLAC, TF096162, Recipient) Water Resource Model (TF096847)

AAA:

Cities Alliance support for Macroproyectos: Developing a Policy and Program Framework Urbanization Review II ) Urban Renovation TA (2 cities) PPIAF - Urban Renewal Financing Instruments Social Compact Work IFC

Transportation, telecom, and multi-sector projects Low income housing projects PPP structuring vehicle for all types of infrastructure

39

Country Development Goals

(from NDP) Issues and Obstacles CPS Outcomes Milestones

WBG Program (and

Partners)

Enhanced Disaster Risk Management

Technical capacity of territorial

entities and CAR in risk

management (# of formulated plans per municipality)

Base: 226 (2011) Target: 790 (2014)

Municipalities assisted and

recovered from rain season

Base: 0 (2011)

Target: 755 (2014)

1. Need to improve territorial

management;

2. Lack of investment in disaster-

resistant infrastructure

1. Strengthened technical

capacity for disaster risk

management at national and regional levels

Baseline: n/a (2011) Target: Improved (2016)

2. National Policy for Disaster

Risk Management formulated.

Baseline: No (2011)

Target: Yes (2016)

1.At least 50 percent of

Colombian Municipalities with

Municipal DRM plans

Baseline: TBD (2011)

Target: 50% (2014)\

2. At least 250 functioning

geological or hydrometeorological

stations connected with early

warning systems

Baseline: TBD (2011)

Target: 250 (2014)

3. Successful definition and

implementation of vulnerability reduction investments in at least 2

large cities

Baseline: 1 (2011)

Target: 2 (2014)

Financial services:

Lending – Ongoing:

APL1 Disaster Vulnerability Proj.(P082429) APL2 Disaster Vulnerability Proj.(P085727) CAT DDO (P113084) Lending – Pipeline:

CAT DDO II (FY12)-(P120899) Barranquilla Flood (FY13) (P120159) Disaster Vulnerability Reduction 2nd phase APL I (FY13) Risk Management:

Blending model for structuring IBRD financial package

Loan customization for CAR (use

of local currency)

Knowledge Services:

Finance by grants – Ongoing:

Risk Modeling Bogota (GFDRR , TF091242, Recipient) Flood Protection in Barranquilla (Supervision funds) (SFLAC, TF096784) Barranquilla-Preparation for integrated urban flood prevention (GFDRR, TF096323) CAPRA (GFDRR, TF096324) Strenght. Crisis preparedness framework (FIRST, TF095378) Disaster Risk Management Analysis (CCDRMA) (GFDRR TF098966) Convening Services:

Financed by grants:

CAPRA (P082429) ACODAL Workshop ―Grandes Sismos‖ Workshop

Improved Environmental Management and Climate Change Resilience

Houses incorporated into the

National Protected Areas system

with ecological representativeness criteria

1. Major urban centers and rivers

polluted;

2. No environmental controls for

hazardous waste;

1. Government has developed a

national policy for climate change

and a national low-carbon growth strategy.

1. Establishing a national

emissions testing center as part of

the air quality monitoring network

Baseline: 0 (2011)

Financial Services:

Lending – Ongoing:

Sustainable Dev. Proj. (P082520) Lending – Pipeline:

Sustainable Dev. AF (FY12)

40

Country Development Goals

(from NDP) Issues and Obstacles CPS Outcomes Milestones

WBG Program (and

Partners) Base: 12.6 million hectares (2011)

Target: 15.6 million hectares

(2014)

3. Farming, ranching contribute to

rapid deforestation and soil

degradation

Baseline: No (2011) Target: Yes (2016)

2. Government has mainstreamed improved environmental practices

in the agricultural sector through a

scaling up of silvopastoril livestock systems

Baseline: 0 ha (2011) Targets: 50,500 ha (2016)

Target: 1 (2014)

2. Water quality monitoring

network and information system strengthened.

Baseline: Not fully operational (2011)

Target: Operational with 13 new

water quality monitoring stations (2014)

(P115639) Sustainable Dev. DPL (FY13) Risk Management:

Use of full menu of IBRD CAT risk financing instruments weather derivative and/or Catbond)

Knowledge Services:

Strengthening Environmental and

Natural Res. Institution (P123864) (Programmatic) FY12

Finance by grants – Ongoing:

Low Carbon Growth (P123695) National Adaptation Plan (TF056350) Rio Amoya CF (TF053534), Jepirachi CF (TF051156), San Nicolas Carbon Sink CF (TF056577) INAP GEF, Mainstreaming Cattle Ranching GEF (TF096465), Protected Areas GEF(TF094084), Netherlands Conservation Incentives Grant FCPF Readiness (TF097224) GEF Protected Areas AF (TF056351) Water Resources and Air Quality Management (SFLAC, TF097348) + Training (WPP, TF096847) Finance by grants – Pipeline:

Course on hydrological modeling for decision makers (WPP financed) International Glacier network Low Carbon Development Study (P124909)

IFC

Green building codes, energy

efficiency, cleaner production

41

Country Development Goals

(from NDP) Issues and Obstacles CPS Outcomes Milestones

WBG Program (and

Partners)

Inclusive Growth with Enhanced Productivity Improved Fiscal, Financial and Social Risk Management

Economic growth (average for

4yr-period)

Baseline: 4,1% (2011)

Target: 6,2% (2014)

1. Price fluctuations and

exchange rate appreciation related

to increased commodity production have important fiscal

and economic impacts that need to

be well managed at national and subnational levels.

2. Public sector contingent

liabilities related to pensions, health care, litigation, and natural

disasters are sizeable and require

sound management.

3. There is scope for further

improvement in the monitoring of

social impacts of crises.

4. The global crisis has exposed

the need to enhance regulatory

and supervisory standards for the financial system.

1. The Central Government meets

the structural fiscal deficit target

for 2014 (2.3% of GDP or less).

2. Financial instruments to

mitigate natural disaster risks have been implemented by 2013.

1. The Central Government

overall deficit:

Baseline: 3.9% (2010). Target 3.5% of GDP or less by 2012 and

3.2% of GDP or less by 2013.

Financial Services:

Lending – Pipeline:

Fiscal Sustainability and Growth Resilience DPL series (FY12-13)

Knowledge Services:

Financed by grants – Ongoing:

National Level Public Finance Study (P106916)

Knowledge and advisory services

to improve the monitoring of social impact of the crisis

Financed by grants – Pipeline:

Institutional Mineral Rights Cadastre Reform (SFLAC) Banking ROSC and FSAP Update

Analyzing the contribution to shared

IFC

Revenue management advisory services in mining (municipalities)

Convening Services:

Fiscal Risk Management

(SFLAC). This activity supports activities related to the improved

management of health and pension

liabilities.

42

Country Development Goals

(from NDP) Issues and Obstacles CPS Outcomes Milestones

WBG Program (and

Partners)

Improved Public Sector Management and Equity and Efficiency of Economic Policies Reduced income inequality as

measured by the Gini coefficient

Baseline: 0.58 (2009)

Target: 0.54 (2014)

1 There is a need to increase

transparency, improve

management capacity, and strengthen the accountability of

public institutions.

2. Effectiveness and efficiency of

public expenditures are poor due

to lack of adequate and timely information on budget execution

at national and sub-national level.

3. Regulations and systems related

with key public management systems including financial,

investment, procurement and tax

management are not linked, preventing the provision of

reliable information on public

expenditures and revenues, as well preventing to the M&E systems.

4. Public management capacities at sub-national level of

government are weak, preventing

the adequate management of public resources and investments,

as well the adequate provision of

services.

5. There is scope for improvement

in the poverty measurement methodology in Colombia.

6. There is scope to improve the existing M&E system for results

7. There is scope to improve access to information in the

country, in particular timely and

well documented access to surveys and administrative

records.

8. There is scope to improve

economic policies to promote

upward mobility and expand the

1. Enhanced public sector

efficiency and transparency by

strengthening and expanding the individual management

information systems that are the

building blocks of an integrated, performance-informed

management model, including:

Sistema Integrado de Informacion Financiera SIIF-Nación, Sistema

Unificado de Inversiones y Finanzas Públicas

SUIFP and Modelo Único de Ingresos, Servicios y Control Automatizado

MUISCA.

Baseline: 2011 - Public Management Information Systems

do not provide on time reliable

information on expenditures and investments.

Target : 2015 - Public

Management Information Systems provide on time, reliable and

consistent information on budget

and investment execution.

2. Management capacities at sub-

national level of governments are improved and have a positive

impact in the quality of

expenditures and the provision of services.

Baseline:2011 - Lack of efficient

mechanisms in the National Government to provide effective

and efficient support to sub

national governments for the strengthening of management

capacities.

Target: 2015 - A set of mechanisms have been put in

place and are available to sub

national governments to improve their management capacities.

1. 100% of consolidated budget

information (at the level of

individual entities) is published online on a monthly basis within

the first week of the following

month Baseline: Currently not published

Target :80% by 2014

2. SIIF and SUIFP information on

the allocation and execution of budget items is fully consistent.

Baseline Not consistent today

Target ?Consistency achieved by 2013.

3. A cloud computing scheme to provide financial management and

monitoring services to local

governments is implemented. Baseline: Currently not existing

Target: First version operating by

2013

4. A program to increase

managerial capacity at sub national level is implemented

Baseline: Not existing

Target: The program is launched in 2012 and by 2013 20% of low

performing municipalities are

included in the program.

5. The FUT (Single Territorial

Format) is implemented as the sole source of sub national budget

and final reporting)

Baseline Limited coverage Target Sole source by 2012

6. New poverty methodology is finalized and announced and well

received by the public.

Baseline: May 2011 official poverty methodology (based in

1996 expenditure survey)

Target: May 2012 revised poverty

Financial Services:

Lending - Ongoing:

Consolidation of National Public Management Information Systems Project (P106628) Strengthening Justice Services (P083904) Strengthening Public Information, Monitoring, Evaluation for Results Management SIL(P099139) Lending – Pipeline:

Sub-National Institutional Strengthening (Royalties Reform)-SIL (FY12)

Knowledge Services:

Financed by grants – Ongoing:

Legal claims mgmt system (IDF, TF058311, Recipient) Expanded subnational rapid assessments of PSM Decentralization Study (P101308) Strengthening Procurement System (TF092702, Recipient) IDF Procurement Law Reform Implementation Advisory work on accounting and financial reporting standards Peaceful Dispute Resolution for the Poor (TF091176) Support for the creation of a central Procurement office Citizen‘s visible audits to improve public investment transparency and accountability (Global Partnership Facility, TF096676) Assessment for e-GP and Road Map Strategy Preparation of National Standard Bidding Documents TA on the review of the current subnational control systems TA in strengthening CGR inst AAA

Poverty, Labor Markets, Inequality

and Monitoring and Evaluation

(Programmatic)

43

Country Development Goals

(from NDP) Issues and Obstacles CPS Outcomes Milestones

WBG Program (and

Partners) middle class.

9. There is scope to improve

economic policies to strengthen the productivity of the informal

sector, and in particular, service

sector.

10. Large percentage of the

population has limited access to basic financial services.

11. Colombia‘s free trade

negotiations with the US and other countries necessitate efficient and

transparent trade transactions that

will serve to enhance Colombia‘s image in world markets as a

trading partner, to generate

savings for the private sector and improve transparency. This will

serve to increase Colombian

exports.

3. Improved quality and accessibility of the evidence base

for decision making and

particularly for policies and programs related to poverty

reduction.

Baseline: 2011 - No micro data produced by DANE is made

available to the public.

Target: 2015 - Public guidelines to grant access to the micro data

produced by DANE.

4. Improvement in the movement of cargo in and out of Colombia

by enhancing automation through

the VUCE system and improved handling of cargo at ports through

risk based policy and procedures.

Baseline: 24 days for imports and 23 days for imports.

Target for 2014: 10 days to import

and 9 days to export.

methodology (based on the 2006 expenditure survey)

Strengthening Public Sector (Programmatic) IFC

Infrastructure advisory, PPP structuring for highways, ports Simplifying municipal construction permits

Streamlining trade logistics policies and procedures; enhance automation; improve risk management policy for trade logistics and border clearance Convening Services:

Financed by grants: Seminar to discuss strategies to improve assessment methodology of subnationals Active participation in expert committee on poverty measurement Support to the Colombian M&E Network Worshop on Social Mobility Workshop on Food crisis and Poverty Workshop on the accelerated data program (ADP) with counterparts in DANE Financial capabilities (P122698)

Improved Productivity and Innovation

Investment in STI (% of GDP)

Baseline: 0.39 (2011) Target: 0.70 (2014)

1. 1 Insufficient investment in

science, technology, and

innovation and weak coordination within the

national innovation system;

2. Inadequate stock of advanced human capital and

low economic relevance and

limited international linkages of existing public

research, including linkages

with the Colombian diaspora;

1. Strengthened capacity of

COLCIENCIAS to promote

human capital for knowledge economy, research and

development, and innovation.

Number of journal articles by

Colombian researchers in SCI

expanded per million population Baseline (2009): 48.0

Target (2014): 58.5

2. Raised awareness of science,

1. At least 3 financing instruments designed and redesigned and approved by Colciencias Board of Directors by 2013. 2. Monitoring and evaluation framework for social dissemination of STI defined by 2013. 3.Number of additional families benefitting from high value agricultural value chains Baseline: 0 (2010) Target: 32,000 (2014)

Financial Services:

Lending – Ongoing:

Agricultural Transition Project (P082167) Rural Productive Partnerships II Project (P104567) Science, Technology, and Innovation (P117590) Lending – Pipeline:

Small-holder Agriculture Competitiveness (FY12) Innovation,Competitiveness, Entrepreneurship SIL (FY13)

44

Country Development Goals

(from NDP) Issues and Obstacles CPS Outcomes Milestones

WBG Program (and

Partners) 3. Limited productivity growth

of SMEs;

4. Regulatory obstacles for

SMEs to start, operate and close businesses and

underdeveloped systems for

secured transactions and collateral registration

technology and innovation in the Colombian society

Total grant applications for

research and development and innovation subprojects received

yearly by COLCIENCIAS

Baseline (2009): 2009 Target (2013): 2674

3. Improved regulations for business and property registration,

and reform the legislation for

secured transactions and the collateral registry.

Efficiency of starting a business Baseline: 9 procedures, 14 days, Target (2014): 4 procedures, 6

days

4. Higher financial inclusion

measured by increased percentage of the population with a deposit

account.

Baseline: 1,295 accounts per

1,000 adults (2010)

Target: 1,400 accounts per 1,000

adults (2014).

4.Design of pilots for enhancing technology transfer and diffusion. 5.Disseminate good practices and regulatory reforms implemented

by local Governments in the areas

measured by the 2012 sub-national Doing Business report in

Colombia

6. Scaling up of financial

education strategy

Knowledge services:

Cooperation agreement on Investment Climate Regional Doing Business Reform Advisory project

Financed by grants – Ongoing:

Innovation, Productivity and Entrepreneurship (TF096995) Financial capabilities and Education Measurement Project (P122698) Financed by grants – Pipeline: Agriculture Risk Management - modeling, advising and training to public and private sector on identifying, quantifying and addressing and financing systemic risks in the agriculture sector. SME factoring (primarily with grants) Analyzing the contribution to shared growth of existing instruments to promote public support for commercial innovation (Diagnostic Facility for Shared Growth, TF096995)

AAA:

Productivity, competitiveness and entrepreneurship (Assessment of drivers of TFP growth, technology transfer diffusion mechanisms) PPIAF Support for the Reorganization of INCO IFC

Gender and microfinance sector support Tier 2 insurance companies and mobile banking Transformation projects (agriculture, beverages, poultry, etc) Support PPP projects through investment.

45

Annex B: CPS Completion Report (CPSCR)

COLOMBIA - CPS COMPLETION REPORT (CPSCR) FY 2008-2011

CPS March 4, 2008 Report No. 42847-CO

CPSPR March 1, 2010 Report No 52878-CO

Contents

I. INTRODUCTION

A. COLOMBIA‘S ECONOMIC AND SOCIAL BACKGROUND

B. WORLD BANK PROGRAM OF SUPPORT

II. CPS PROGRAM PERFORMANCE

A. OVERVIEW AND PRINCIPLES OF ENGAGEMENT

B. PROGRESS BY STRATEGIC ENGAGEMENT THEMES (TOWARDS CPS OUTCOMES

B.1. Sustained Equitable Growth

B.2. Poverty Alleviation and Equity of Opportunity

B.3. Environment and Natural Resources Management

B.4. Peace and Development

B.5. A State at the Service of its Citizens: Efficient and Effective Government

III. WORLD BANK GROUP PERFORMANCE

A. CPS DESIGN

B. IMPLEMENTING THE STRATEGY

C. MANAGEMENT OF RISKS

IV. LESSONS LEARNED AND RECOMMENDATIONS

CPSCR ANNEX 1. COLOMBIA CPSCR RESULTS MATRIX FY08-11 (as of Feb. 3, 2011)

CPSCR ANNEX 2. CHANGES IN THE INDICATIVE LENDING PROGRAM FOR FY08-11

CPSCR ANNEX 3. INDICATIVE AND ACTUAL KNOWLEDGE (AAA) PROGRAM FOR

FY08-11

46

I. INTRODUCTION

1. This Country Partnership Strategy Completion Report (CPSCR) assesses the joint IBRD/IFC CPS

for Colombia (FY2008-11). It describes the support provided through an integrated package of financial,

knowledge, and coordination services; evaluates (i) the achievements of CPS program outcomes; (ii)

assesses World Bank Group (WBG) performance; and (iii) draws lessons for the preparation of the

forthcoming CPS (FY2012-16). The March 1, 2010 CPS Progress Report (CPSPR) adjusted the original

CPS program and strengthened its CPS Results Matrix. This CPSCR uses the updated CPSPR Results

Matrix as the reference for assessing CPS program performance.

A. Colombia’s Economic and Social Background

1. During preparation of the CPS (2008-11), Colombia was enjoying a period of high economic

growth (an average of five percent per annum for CY07 and CY08), growing consumption,

accelerating investment, and rising confidence. This was due to a propitious external

environment, improving internal security, access to new geographical areas and markets,

expanding credit, and a natural resources boom. The improved economic conditions resulted in

rising incomes, a reduction in poverty, and greater social sector coverage. But the international

economic crisis 2008 brought a halt to the high growth period, and the near-future prospects were

clouded by uncertainties concerning policy continuity and the need to tackle structural obstacles

to increase long-term growth.

2. The Government faced daunting and simultaneous challenges to achieve sustained peace,

security, and economic stability. As a result of successful demobilization negotiations, the

Government had to reintegrate thousands of former combatants into civilian life and provide them

with sufficient incentives not to re-arm or re-engage in illegal activities. The guerrilla and

paramilitary activities and the narco-trafficking have continued to pose obstacles to achieving

sustainable development in Colombia.

3. The country‘s comprehensive social protection system limited the impact of the crisis on poorest

families. During the crisis, the Government effectively shielded social protection expenditures

from broader cuts, and expanded programs targeted to the poor, such as Familias en Acción, the

core conditional cash transfer program, and Juntos, the Government‘s strategy to provide social

work assistance to the poorest families. While challenges remain in terms of coverage and

efficiency of the social protection system, the existing programs preserved a minimum level of

benefits, contained the negative impact of the crisis on poorer households and shielded them from

the downward adjustments that often result in losses of human, physical, and financial assets.

B. World Bank Program of Support

4. The current CPS, discussed by the Executive Board in April 2008, was prepared after a new

political administration in Colombia came into office. The structure of the CPS was aligned with

the priorities identified in the new National Development Plan for 2006-2010 with a proposed

IBRD engagement of a base lending of around US$4 billion (for the FY08-11) with an

increasingly active IFC program. This was complemented by knowledge and

coordination/convening services as well as specialized grants. The CPS was designed to be

flexible and innovative in response to Colombia‘s financial and development needs. In keeping

with past practice, the CPS allowed for innovative instruments in response to program needs. It

also called for increased coordination within the Bank Group and with other development

partners.

47

5. The implementation of the strategy has proceeded for the most part along the lines established in

the original CPS. Most of the proposed activities outlined in the CPS were carried out, but

adjustments were made to respond to unexpected developments (see Annex B). The ensuing

international economic crisis in particular affected the financing needs of the Government, as well

as their requirements for knowledge and coordination services.

II. CPS PROGRAM PERFORMANCE

6. Overall the CPS program performance is rated satisfactory as the program achieved good

progress toward all major expected outcomes.

7. The IBRD lending program proceeded faster than anticipated to the economic crisis in Colombia.

During the CPS period, the Executive Board has approved 20 loans to Colombia amounting to

US$3,703 million. In addition, during this same period, the Bank delivered an average of six

analytical and advisory activities (SAP count) per fiscal year, ranging in topics from climate

change, education quality, decentralization, financial sector access, poverty measurement (Human

Opportunity Index), social protection, health system modernization and extractive industries.

Disbursements for the CPS period have been around US$3.9 billion (average of US$975 million

per FY), while overall exposure to Colombia rose to approximately US$7.5 billion. The Bank‘s

response to the crisis has led to an acceleration of disbursements in the last couple years, not only

because of fast-disbursing, policy-based loans but also because a few investment operations had a

front-loaded disbursements profile. As a result, IBRD lending to Colombia increased from

US$940 million in FY08 to US$1,275 in FY09, dropping to US$1,173 million in FY10 and

projected at US$315 million in FY11. During the CPS period, the Bank had also around 27 grants

from different trust funds totaling over US$60 million under implementation.

A. Overview and Principles of Engagement

8. The Bank followed three basic principles of engagement in developing its relationship with

Colombia: flexibility, responsiveness and innovation. The flexibility granted by the CPS proved

to be extremely perceptive. In the initial stages of the CPS, when the currency was strengthening

and foreign capital flows were strong, Colombian authorities were focused on the innovative

instruments available from the Bank and were particularly interested in domestic currency

financing, as well as a mix of investment and development policy lending. More recently, the

authorities have asked for support in dealing with the adverse consequences of the global crisis.

This includes additional financing and technical assistance to help sustain and improve crucial

government programs to attenuate the effects of the crisis.

9. To support the emerging needs of the private sector, the IFC also adapted its Colombia strategy

and diversified its portfolio with new projects in infrastructure logistics, microfinance, higher

education, vocational training, agribusiness, natural resources (oil, gas, and mining), and energy

efficiency. The IFC response also led to an increase in commitments and disbursements. The IFC

committed portfolio almost doubled from US$504 million in FY06 to US$881 million in FY10,

as a result of financing 27 projects during this period (in agribusiness, the financial sector,

manufacturing, infrastructure, extractive industries, and private equity fund) for a total

commitment of US$846 million, including syndications. These results were in great part due t

the IFC decentralization process. Today, the Bogotá regional hub office has 30 staff, a three-fold

increase from 2006.

10. In keeping with the principles of engagement, the World Bank Group has also provided an array

of knowledge and convening services to Colombia, ranging from technical support embedded in

the preparation of projects to analytical work specific for Colombia, along with both regional and

48

global studies, just-in-time technical assistance specifically tailored for particular requests, policy

dialogue, and transfer of global knowledge. One important and innovative aspect of this work was

its multi-year programmatic approach, where IBRD had an on-going engagement in key areas,

and defined its annual work program according to the existing needs at the time. The IFC

advisory program expanded in Colombia, and its services were also based on a programmatic

approach that supported strategic investments, with an emphasis on sustainable business advisory

projects, investment climate work, and access to finance engagements. In August 2010, after

elections, the Bank Group team prepared a set of thematic policy notes and met with the President

Santos and Government officials to discuss potential priority areas and provide early input into

the new National Development Plan.

11. Financial innovation was a hallmark characteristic of the Bank Group‘s program. Colombia has

always made effective use of the new Bank instruments, and in some instances has promoted and

led the innovation. During the CPS period, Colombia was one of the first countries to make use

of the new contingent financing for natural catastrophes under the revised Deferred Drawdown

Option (DDO) guidelines. Over the past few years, the Bank‘s Treasury Department has advised

Colombia on several issues related to risk and debt management, including contingent liabilities.

12. The Bank has advised Colombian authorities on strengthening of the Investor Relations Office,

leveraging the Bank‘s expertise in accessing international markets and developing outreach

materials. Complimentarily, the Bank continued providing local currency financing to sub-

national entities such as Cartagena, Antioquia, and Bogotá by converting outstanding loan

amounts to pesos.

B. Progress by Strategic Engagement Themes (Towards CPS Outcomes)

13. The CPS Outcomes, Status and Evaluation Summary, and IBRD/IFC interventions that

contributed to the CPS outcomes are summarized in the CPS Completion Report Matrix in Annex

A.

B 1. Sustained Equitable Growth

14. Commendable macroeconomic management, improvements on institutions, and strengthening

of the financial markets brought about economic growth and increase in competitiveness.

Human capital growth was improved through enhanced quality of secondary and tertiary

education programs.

15. The work under this theme became crucial for the Bank‘s engagement following the onset of the

economic crisis. The WBG contributed to preserving economic growth and minimizing the

impact of the crisis in Colombia through policy-based and IFC loans, as well as targeted

interventions and provision of knowledge and coordination/convening services.

16. The focus of the work was on the economy‘s competitiveness, the financial system, capital

markets, infrastructure development and human capital. Among several loans, the most important

were some development policy loans that supported important policy reforms in the areas of

business efficiency and competitiveness, along with the reforms in the financial sector. The Bank

supported implementation measures that helped keep the banking system adequacy ratio above 10

percent. These policy-based loans also served to cover the fiscal needs during the crisis and to

preserve macroeconomic stability. This was accompanied by project lending in infrastructure.

17. In the area of competitiveness, lending was buttressed by substantial technical assistance.

Development policy lending on business productivity was the umbrella for the program and was

part of a programmatic series that supported reforms in the areas of innovation and technology,

quality standards, and private sector participation in infrastructure and logistics. The Bank also

49

supported labor market reforms through a multi-year knowledge service program that was the

main input in the design of new policies to reduce informality and make the labor markets more

efficient and flexible. A significant contribution was the assistance provided to the National

Planning Department through studies and seminars in their formulation of policies for

employment and income generation.

18. In the area of financial sector development, the Bank provided development policy lending on

finance and private sector development, which supported the recent legal reforms designed to

strengthen financial sector resiliency and deepen capital markets. This was accompanied by

knowledge services to improve the framework for consolidated supervision and to regulate over-

the-counter markets (i.e., advisory work on accounting and financial reporting standards and

strengthening social accountability). The Bank also helped Colombian authorities to undertake a

financial crisis simulation exercise. Through the FIRST program, Colombia received Bank

support to correct any identified shortcomings.

19. The IFC also made investments in key financial lending institutions in order to develop new

services. Since access to finance is low in Colombia, particularly in the rural areas, the joint

Bank/IFC work in financial sector reforms greatly facilitated the IFC investment program to

reach the underserved. With significant involvement in Colombia‘s microfinance sector, IFC

investments in 6 lenders enabled them to make almost 1 million loans for a total US$1.13 billion

in CY2009, equivalent to about one-quarter of all loans by the IFC‘s Latin American

microfinance lenders that year. Bancamia is a key IFC microfinance partner in Colombia and the

country‘s third microfinance lender. The IFC invested US$10 million for a minority equity stake

in the Bancamia in May 2010. In CY2009, Bancamia made over 300,000 loans for a total

US$238.6 million, or an average of about US$800 per loan. Two-thirds of its clients are low-

income women living across 300 municipalities around Colombia.

20. The IFC has also played a role in strengthening Colombia‘s conventional banking system through

countercyclical investments. In May 2010, for instance, IFC committed US$23.5 million in equity

and subordinated debt to finance acquisition of non-performing loans first originated by

Bancolombia, the country‘s biggest bank. This transaction, signed in the aftermath of the global

financial crisis, allowed a systemically important bank to dispose of its non-performing assets

through a market-based mechanism. In addition to financing, IFC also provided a package of

corporate governance advice and workout guidelines that set an example of distressed asset

resolution. The IFC has been active in the global non-performing loan (NPL) market for over a

decade and was able to use its expertise to benefit Bancolombia and assist in the development of

an active NPL market in Colombia.

21. The IFC and IBRD also closely coordinated their support to concentrate much of the project

financing to improve the infrastructure in the country, particularly in areas of transport and basic

services. This was complemented by investments to improve water and sanitation services, solid

waste management, urban housing development, as well as renewable energy and energy

efficiency. The Bank also supported the development of the urban mass transit program in six

major cities, recognized as one of the most innovative and pioneering projects in LCR. This has

been accompanied by assistance to improve urban services in Bogotá, including preliminary

studies on the viability of a metro system. Through a programmatic approach, IFC invested in

transportation/logistic projects (roads, airlines, and ports) and leveraged its investments with

Advisory Services on trade logistics and competitiveness. This approach is exemplified by IFC‘s

role in one of Latin America‘s most significant road projects. Ruta del Sol, a 1,000-kilometer

highway linking Bogotá to the Caribbean coast. The IFC‘s Infrastructure Advisory Team acted as

transaction adviser to Colombia‘s Transportation Ministry, assisting it in structuring and

implementing a public/private partnership project for the concession of the highway. Colombia

has achieved considerable success in attracting local contractors to other public–private projects,

50

but the Government felt IFC would be crucial in convincing large international groups to bid for

such a large and complex project. The IFC completed the three-year concession process in

August 2010. Contracts worth US$2.7 billion were awarded to companies from Argentina, Brazil,

and Italy, as well as Colombia. In addition to reducing travel time between Colombia‘s biggest

cities and the coast, Ruta del Sol will also improve access for once-isolated rural communities.

22. One of IFC‘s largest exposures in Colombia is to Avianca, the national flagship airline. The IFC

committed US$50 million in loans to the airline in September 2008 as part of a turnaround

program being implemented by the troubled carrier‘s new owners. Avianca is an integral part of

Colombia‘s transport system given the country‘s mountainous terrain and long distances between

cities. The company was later able to merge with El Salvador‘s TACA, improving connections

between Central America and the Andean region.

B.2. Poverty Alleviation and Equity of Opportunity

23. The Bank contributed to expanded coverage and quality of public services and social

protection targeted to poor. Increased equality in the Colombian society and opportunities for

the less fortunate especially during the period of the financial crisis mark a significant

development in the fight against poverty including an expanded coverage and quality of public

services. Support ranged from reforms in the health sector to improving the quality of

education; promoting science, technology and innovation; and strengthening the social

protection system.

24. Significantly triggered by the onset of the crisis, the core of the support was through a loan to

preserve the financing of the country‘s main social welfare program, Familias en Acción, a

conditional cash transfer program. Among the Government initiatives in terms of providing social

assistance and poverty alleviation is the creation of Red Juntos, which aims to reduce extreme

poverty by providing extremely poor families with accompaniment and preferential access to core

social services. The Bank‘s support to these programs includes continued knowledge services to

help improve the protection under the social security system, rationalize the existing complex set

of overlapping programs, and modernize the system of information and evaluation.

25. The work in this area was based on the principle of increasing the equality of opportunities by

expanding the provision of basic services. As such, during the current CPS several loans were

extended to expand services in key areas such as water and sanitation, and agricultural and rural

development. In the area of agriculture and rural development, the program included the support

to small farmer organizations to increase market access for their products, and foster a sense of

entrepreneurship. The program also included support for agricultural research and development as

well as the strengthening of sanitary and phytosanitary systems along with the first public, high-

level bio-safety laboratory in the country. The IFC‘s US$30 million financing for Abocol helped

improve agribusiness competitiveness by supporting the fertilizer sector.

26. The Bank Group‘s support in this area also included substantial analytical and advisory service

(i.e. publications on agricultural sectoral issues.)

27. The program also included several projects in education, mostly in the rural areas, and focused on

secondary school quality and enrollment. A core element was support to the student loan program

geared toward giving access to secondary school education to indigenous people. As for the

IBRD Antioquia Secondary Education project, completion rate in the poorest areas has

dramatically increased. The IFC complemented the education initiatives by investing in

Uniminuto, a higher-education institution that serves mostly students from lower quintiles of the

population. Uniminuto aims to reach a total enrollment of 44,000 students by 2015, half of which

will be women. In CY2009, the school had 26,000 students of whom 60 percent were women.

51

Uniminuto is focused on serving the lower two quintiles of Colombian society. Many of its

students are from secondary cities, peri-urban, or rural areas.

28. A key area of involvement was the support to improve the efficiency and sustainability of the

Colombian health system. The complexity of the financing and delivery systems, with cross

subsidies and different forms of reimbursements, and coupled with a Constitutional Court ruling

that guarantees the fundamental right to health, firmly established the need for regulatory reform

to guarantee equal access to all citizens and a fundamental review and reform of the health sector.

29. The Bank played a key coordination and supportive role in the updating of poverty measures.

This work entailed naming a high-level Presidential Commission to assist the Government in

updating its poverty measurements. The lack of consistent information and the publication of

recent poverty data created significant doubts about the accuracy of the preliminary figures. The

work of the Bank and the Commission helped give credibility to the poverty figures.

30. Several grants focused on gender issues and on strengthening institutions dealing with

discrimination. The Bank, with financing from the Japanese Social Development Fund, helped

improve the skills of mostly young single mothers, who have been displaced by the violence in

the country, to assist them to integrate in the formal economy. Another grant supported the

Presidential Secretary for Gender to institute a system of certification of businesses that promote

gender equality and are apply gender-free policies.

B 3. Environment and Natural Resource Management

31. The considerable increase in design and implementation of knowledge and lending services in

sustainable development dramatically increased awareness on environmental issues. The

World Bank Group was able to provide input to national policy and help the Government to

strengthen institutional capacity for managing environmental services and mainstreaming

principles of environmental sustainability.

32. The environmental sustainability activities ranged from loans to support policy reforms and

implementation, to grants designed for piloting key protection and adaptation programs. This was

complemented by many investment projects in flood protection, water treatment, and disaster risk

management. A significant part of the program dealt with climate change adaptation programs.

33. One of the first actions under the CPS was to provide financing and technical support for the

implementation of important policy reforms. The work in this area involved updating the

environmental health policies of the country, where new emission standards were applied. It also

included updating the institutional structure to deal with the formulation and implementation of

environmental policies.

34. Under the CPS, there were several investment projects that contributed to environmental

sustainability, including lending activities in water and sanitation and solid waste management.

These activities are being complemented by two projects under supervision for disaster risk

management, which are designed to improve the data gathering and analysis framework, along

with reinforcing school and hospital buildings. The Government also entered into a catastrophic

risk deferred drawdown option (CAT DDO), the new financial instrument that provides

contingency financing in case of a major natural disaster.

35. The GEF supported a variety of activities, including conservation of national protected areas, and

multi-country integrated Silvopastoral approaches to ecosystem management, an example of

recent achievements under the National Protected Areas GEF with sustainable natural resource

practices in place. Several other grants supported pilot programs of renewable energy, efficiency,

and greenhouse gas reductions in the transport sector. Colombia has also made effective use of

carbon finance grants.

52

36. The IFC invested selectively in small hydro-generation in remote areas of Colombia and in

thermal efficiency, consistent with its focus on reducing impact on climate change through

renewal energy and cleaner, more efficient electricity generation. The IFC was instrumental in

upgrading and expanding the Termoflores natural gas-fired electricity-generating plant in

Barranquilla through a US$62.5 million loan package that included US$10 million in

syndications. The project used energy efficiency gains and heat recovery to increase output

without a significant increase in gas consumption.

B 4. Peace and Development

37. The Bank played an important role in supporting the country’s efforts to achieve lasting peace

and inclusive development. The Bank’s interventions contributed to improved effectiveness of

Government’s peace initiatives by increasing awareness of global experience and piloting

innovative models of participatory community development in conflict-affected zones. Colombia‘s recent history has been marred by violence and armed conflicts that have precluded

the country from achieving its full development potential. Violence has also displaced a large

portion of the population. The Bank actively supported the joint efforts by the Government and

the international community with both financing and coordination services.

38. As an innovative approach to the gender, minority populations, and youth issues, the Bank

integrated grant activities to the Peace and Development pillar. The Internally Displaced

Women‘s Project was designed to increase the economic empowerment of women in

communities of internally displaced populations by assisting them in joining the formal labor

force, building their assets (including greater food security), and helping them to understand the

causes of political and/or domestic violence against women and develop tools to mitigate them.

The Bank closely engaged in supporting the Secretary for Women‘s Issues in the Presidency with

an initiative to certify those businesses and enterprises that adopted gender-neutral employment

policies. The Human Rights Project‘s was designed to identify effective links between the nature

and work of the Regional Peace and Development Programs, Government, other partners and the

Bank, regarding human rights and to promote the introduction of human rights best practices in

peace and development interventions. The new operations, Afropaz, designed to strengthen Afro-

Colombian organizations, build social networks and empower communities to promote local

development, and Access to Opportunities for Youth, designed to enhance the access of young

men and women to opportunities for education, work and political participation, were recently

declared effective.

39. As part of the activities under this pillar, the Bank was a key player in the coordination of

activities of the international community. The Bank led organizing and preparing the

International Disarmament, Demobilization and Reparation Congress in Cartagena in May of

2009. This Congress and the Education for Peace Partnership are examples of the catalytic role

the Bank plays in promoting dialogue and disseminating experiences.

40. Joint efforts with the International Organization for Migration, the Bank contributed to

diminishing the risk of impoverishment of the displaced population and to the peace-building

process, by promoting the application of measures for protection of patrimonial assets, providing

land titles for those internally displaced populations whose rights have not been protected, and

proposing public policy initiatives for restitution of properties of internally displaced populations.

Under the two initial phases, more than 3 million hectares have been protected, equivalent to

100,000 farms and 127,000 land rights, benefiting overall more than 95,000 individuals. A third

phase was declared effective in August 2010, and project outcomes have been acknowledged and

recognized by the new Government to the extent that the project will constitute the foundation of

the land restitution and regularization flagship program of the Ministry of Agriculture and Rural

Development that will benefit 480,000 displaced and violence-affected families.

53

41. The Bank raised the awareness of the human challenges confronted by Colombians affected by

violence through a unique publication, ―Voices.‖ The book, published in June 2009, contains

stories of the experiences of individuals directly touched by the violence. A special exhibit, which

included a collection of photographs and testimonials, was mounted in several Colombian cities

and in Washington D.C.

B 5. A State at the Service of its Citizens: Efficient and Effective Government

42. Excellent public financial management paired with an increase in the number of social

programs contributes to Central Government efforts to improve public sector management and

citizen services. The Bank’s supported programs improved public sector management and

citizen services in support of Central Government efforts.

43. The World Bank Group‘s expanded its support for institutional reforms and improvement in

governance. Initiatives ranged from strengthening the public management information systems to

integrating the tax and customs administration processes, implementing a system of monitoring

and evaluation of government programs, expanding the assistance to sub-national governments,

and assisting with the modernization of the judicial sector. One of the major achievements was

the introduction of a new system for budget management throughout the Central Government. It

is a web-based system, with open architecture, which will greatly improve the efficiency of public

financial management, expand access to information, and establish greater transparency. The

new system is being complemented with new norms and procedures for budgetary management,

as well as the introduction of a single account for cash management.

44. The support for improving the managerial systems was designed for the full application of

country systems. The Bank accepted the use of Colombia‘s financial management system for its

projects and programs. This was achieved with considerable support by several project loans that

helped modernize the systems, and the progress achieved in streamlining implementation

arrangements and the reliance on the Colombian Supreme Audit Institution (SAI) and sub-

national SAIs for external audits for Bank-financed projects. The Bank provided extensive

training and technical assistance to the SAI toward strengthening its staff capacity; and from

2008, all projects with the exception of grants implemented by NGOs are audited by the SAI.

45. A Public Financial Management (PFM) and Procurement Performance Assessment Report, which

was authorized by the Government, concluded that PFM systems, institutions, and processes at

the central level show advanced levels of performance, which are close to or follow good

international practice. There remain a few gaps where challenges and opportunities to further

enhance PFM in the country could be pursued in the near future toward strengthening fiscal

discipline and increasing operational efficiency and transparency.

46. The program under this theme included targeted financing and a broad program of knowledge

services. During the last two years, several smaller loans were approved to improve the services

of the state. They included a loan to support building the Management and Planning System for

the Government (SIGOB), a fairly advanced system of monitoring and evaluation of government

programs, which is considered a leading program in Latin America. This technical assistance

loan is assisting with all of the evaluations of government programs being carried out by the

National Planning Department. The Board has approved a follow-up loan for the Modernization

of the Public Sector Management Systems. This operation is part of a series of loans that, over the

years, helped modernize the budget and financial systems, along with the tax and customs

agencies. The other important operation will be assisting with the process of judicial sector

reforms, which remain a major development challenge for the country.

47. Among the most promising work was the development of new relationships and support for sub-

national governments. The public sector group has developed a new product called the Rapid

Assessment and Action Plan (RAAP) for sub-national governments. Public sector experts on

54

fiscal, budget, tax, financial management and information systems worked with local authorities

to develop an action plan for key public sector reforms. The first two studies were presented in

cities where there has been tremendous improvement in the financial, fiscal, and managerial

capacities. The IFC complemented this work with cities and regions on issues of regional

competitiveness, local business climate, and management of royalties from mining development.

The IFC‘s Advisory Services expects to expand its royalty management activities in Colombia,

assisting companies and local communities in managing revenues from mining and oil producing

projects. The IFC currently advises Ecopetrol, the state-owned oil company and is in advanced

talks with other clients on future engagements.

III. WORLD BANK GROUP PERFORMANCE

48. The World Bank Group performance is rated satisfactory. The CPS was relevant, aligned with

the Government’s National Development Plan and its design and implementation of the

program contributed to the achievement of CPS outcomes with a focus on results, and a timely

adaptation to changing circumstances and priorities. It delivered a package of services beyond

those initially anticipated in the CPS, in response to both the emerging needs of the country and

the impact of the international financial crisis.

49. The success of the strategy and program was due in part to the continued Bank presence over the

years, the close engagement with the client, WBG‘s responsiveness and an active supervision and

follow-up to the projects and scheduled activities.

A. CPS Design

50. The foresight to preserve the flexibility and to ensure full compatibility with the Government‘s

program proved critical. In addition, the design of the strategy was constructed on the basis of

extensive experience and understanding of the conditions and the development challenges of

Colombia. The initial CPS results framework entailed a mixture of outcomes and outputs and

was therefore strengthened and updated in the CPSPR.

51. The success of the Bank‘s program in Colombia owes much to the fact that the CPS was well

aligned with the priorities of the Government, and thus equipped with strong local ownership.

The strategic engagement areas of the CPS were fully consistent with the main building blocks of

the National Development Plan.

52. The Bank‘s ability to respond successfully to the changing circumstances in Colombia was rooted

in the flexibility of the CPS design. The Bank was able to adjust its program or reallocate staff

and budgetary resources in response to the country‘s emerging financial and development needs,

especially at a time when international markets were severely constrained. Colombia continues to

promote innovation by taking full advantage of the new instruments and policies offered by the

World Bank.

B. Implementing the Strategy

53. The overall implementation of the strategy was satisfactory. The Bank followed essentially the

overall thrust of the CPS, while having to make adjustments in response to the international

financial crisis. The initial program had to be altered slightly to include accelerated

disbursements through policy-based loans and projects supporting budget programs. Most of the

potential investment projects initially identified in the CPS were carried out, and some new

priorities were introduced as a result of continued dialogue with the authorities.

54. As shown in the Results Matrix (Annex A), most of the activities of the WBG involved transfer

of knowledge and provision of advisory and convening services. Making effective use of the

wealth of knowledge available in the Bank, Colombia also relied on the Bank‘s support to

55

evaluate different policy alternatives and proposals. While often associated with lending

activities, much of the knowledge work was specifically designed to address direct requests or

particular issues. An important characteristic of the Colombia program was the inclusion of

programmatic multisectoral knowledge services, designed to be an open multi-year engagement

in a particular area. The annual activities were determined after a review of previous

accomplishments and the evolving needs of the country. Finally, during the political transition to

a new administration in mid 2010, the Bank prepared policy notes in areas of special interest to

the incoming authorities. These were discussed with the newly elected President Santos and

Government members, and offered an excellent entry point for engagement with the new

authorities.

55. The implementation of the program entailed close supervision and periodic reviews of the

portfolio. The Bank‘s supervision occurred though continuous monitoring and evaluation of the

activities, both at the project and country level. The high-quality of Bank lending during the CPS

period was evidenced by a generally satisfactory progress in portfolio implementation and by the

achievement of the project‘s development objectives (see Table 3.1). Policy-based lending played

an important role in producing results.

56. The current Administration has underlined the need to strengthen the institutional capacity of key

government entities to optimize the implementation of investment projects, in particular civil

works financed with public funds at the national level. The government, led by the Ministry of

Transport, is exploring an appropriate strategy, including a review of the legal framework,

enhancing procurement processes and external controls, in addition to strengthen the technical

capacity of the executing agencies.

57. To that end the Bank has maintained close scrutiny of the portfolio in Colombia and timely

addressed procurement issues that have been uncovered during Bank supervisions. In addition, in

close coordination with the borrower, the Bank has incorporated a broad set of measures into both

project implementation and supervision to strengthen the overall fiduciary control framework and

to safeguard individual operations.

58. The 2008 Country Performance Portfolio Review (CPPR) focused on assessing the quality of the

portfolio with respect to necessary adjustments in relation to the CPS. As a consequence of the

CPPR, three projects were restructured that showed problems on implementation and slow

disbursements. The 2010 CPPR focused on establishing a new coordination mechanism between

the Ministry of Finance, the National Planning Department, the Social Action Department, and

the Bank for the implementation and discussion of the grants pipeline.

Table 3.1 Portfolio overview (data as of May 16, 2011)

Variable FY2007 FY2008 FY2009 FY2010 FY2011

Number of projects 17 20 15 18 22

Net commitment (US$ million) 1,900 2,866 1,857 2,489 2,044

Number of problem projects 0 2 1 2 2

% at risk 0.0 10.0 13.3 11.1 9.1

% proactivity -- -- 50 -- --

% Realism Index -- 47.5 31.1 40.7 44.4

Overage projects by FY 0 2 1 0 0

Total undisbursed balance (US$

million) 1,117 1,488 1,451 885 734

Disbursement ratio by FY 39 48 25 60 42.5

56

59. Much of work of the Bank Group was carried out in partnership with other development partners.

The Bank continued to build excellent relations with groups involved in the development agenda

of Colombia. The work with agencies extending bilateral support included joint activities in the

area of environment, climate change, and the peace and development agenda. While the

Government coordinated much of this work, the financing from bilateral partners was critical for

the success of some Bank-supported programs. The Bank has worked closely with the European

Union and the UN System on peace and community development in areas affected by violence.

60. The Nordic countries were also closely engaged, especially in the areas of environmental

protection. In several programs, the Bank co-financed and worked in close coordination with the

IDB, such as in conditional cash transfers, water and sanitation, and science and technology. The

Bank and IDB also closely coordinated in furthering the development of country systems and

prepared a program to pursue shared documentation. The alliances also involved NGOs,

particularly those involved with efforts to consolidate the peace process and create the conditions

for more inclusive communities. A well-publicized alliance took place with Shakira, a famous

Colombian artist, who is leading an international effort to promote greater attention to early

childhood development programs.

C. Management of Risks

61. The risks originally identified in the CPS were well managed. The CPS anticipated potential

difficulties emanating from external shocks. The subprime financial crisis and reductions in trade

with neighboring countries actually materialized and led to the need for additional financing.

Naturally, the overall magnitude of the crisis was beyond any initial estimate, and the rapid

exposure to Colombia was not fully anticipated. The domestic risks to the strategy, which

included both overheating of the economy and political factors, did play a significant role. In

fact, the political transition was much smoother than foreseen with a continuity of programs and

an excellent relationship with the new authorities.

IV. LESSONS LEARNED AND RECOMMENDATIONS

62. The CPS was designed to be flexible and innovative in responding to Colombia’s financial and

development needs. The IFC also adapted its Colombia strategy and diversified its portfolio

with new projects. This flexibility allowed the Bank to explore new avenues of resources, mainly

through trust funds, that financed unanticipated Government requests for knowledge and advisory

services. Just-in-time technical assistance tailored for particular requests, policy dialogue, global

knowledge transfer and a fully integrated trust fund portfolio resulted in an important and

innovative aspect of the program. Colombia was one of the first Bank clients to take advantage of

the flexible DPL with Catastrophe Drawdown Option (CAT-DDO) as part of its integrated

approach to disaster risk management. Combined with the other ongoing activities by the Bank --

which span the range of financial and knowledge services -- Colombia has one of the most

integrated programs in risk management of any Bank client. Its multi-year, knowledge and

advisory programmatic approach, where IBRD had an on-going engagement with the

Government in key areas, defined the annual work program (for knowledge and convening

services) according to the existing needs at the time. The IFC advisory program also expanded in

Colombia, and its services were also based on strategic aims. This flexibility and just-in-time,

multi-sectoral programmatic advisory approach proved to be effective and should be maintained.

63. Good Governance and increased transparency in Colombia’s economy remains challenging

and the performance of public financial management (PFM) systems including public

procurement is a critical factor for fiscal discipline, strategic allocation, operational efficiency

and transparency in use of public funds. The Bank will therefore continue to pay special

attention to PFM issues to support the Government in enhancing its operational efficiency,

57

ensuring sustainability of the procurement reform, including improving country intuitional

capacity, creating of a public procurement bureau, enhancing transparency, promoting

participation of the private sector, and the creation of a more efficient compliant mechanism.

64. With the Government of Colombia wanting to borrow more than currently possible under Bank

exposure limits — it is advisable to agree with the Government on an integrated package of

financial, knowledge, and convening services with a focus on providing customized results-

focused development solutions in areas where the Bank Group can add value. In this context, it

will be important for the WBG to increase its efforts to leverage resources from other

development partners and to maximize it development impact by created better synergies among

different sectors in support of the Government‘s program.

58

CPSCR Annex 1 – Colombia CPSCR Results Matrix FY08-11

CPS Outcomes Status and Evaluation Summary IBRD/IFC Interventions

Approval/Completion-date/ICR/ISR(DO/IP)

Rating

SUSTAINABLE EQUITABLE GROWTH

Contribute to Government efforts to sustain growth

i.e., through improving the business climate,

measured by:

Reduce total number of administrative procedures

for starting businesses by 50% with respect to

baseline in 2004

Increase annual value of non-traditional exports to

US$10 billion per year

Increase financial sector depth, reflected in total

credit to the private sector (CTPS), growing to

27% of GDP

ACHIEVED

IFC Doing Business 2011 Report

Reduced starting business from 19 to 9

procedures; led to reduction of bureaucratic and

legal hurdles to incorporate and register a new

firm

Improved close advisory on 9 categories of Doing

Business in the last 3 years of the report, and have

had a positive impact on attracting foreign

investment to the country

Non-traditional exports averaged US$15.6 billion

annually in 2007-2010 compared to 9.2 billion in

2002-06 - an increase of 70 percent.'

Incentivized resource management projects in

communities to take stronger control of royalty

investment by getting local governments to

account for their inputs in the design, process,

and delivery of public works

Financial Sector DPLs:

Growth in CTPS to 32.7% of GDP Bank-

supported implementation measures to keep the

banking system adequacy ratio above 10% (June

2010)

Increased macro stability through support for

financial sector reforms: capital increase,

strengthening of liquidity regulation, enhancing

Financial Services:

Business Productivity III (FY08/FY11/ICR:S) Financial Sector Development DPL (FY10/FY12/(S/S))

Productive Partnerships Project II(FY08/FY14/(MS/MS))

Agricultural Transition (FY05/FY12/(MS/MS)

Knowledge Services:

SME Finance ESW (FY08)

Strengthening arrangements to deal with financial crisis

(TA)

Supervision of financial conglomerates (TF)

Trade Logistics Advisory Program (TF-IFC)

Streamlining trade procedures(IFC)

Deepening of capital markets

Competitiveness, innovation (ESW improving logistics

and trade facilitation)

Financial sector policy note (FY11)

Extractive Industries Royalty Mgmt. (TF-IFC)

FIRST Strengthening Crisis Preparedness Framework

(TF)

Coordination/Convening Services :

Fiscal Risk Knowledge Management Services (FY11-12)

Colombia Lessons in the Agricultural Sector (En Breve

Publication)

Presentation at Cenicafe‘s 60th Anniversary

Presentation at SAC Congress

Publications (video – press) on agriculture sector, BRTS,

WDR 2008 ―Agriculture for Development‖ – 600

participants, PPP advisory work

59

CPS Outcomes Status and Evaluation Summary IBRD/IFC Interventions

Approval/Completion-date/ICR/ISR(DO/IP)

Rating

SUSTAINABLE EQUITABLE GROWTH powers to close illegal intermediaries

Adopted measures (improving professionalism of

intermediaries securities market, protecting

investor rights, increasing transparency, and

regulating derivative products) adopted on

financial front and derived from Finance DPL

Enhanced liquidity of the credit system

Productive Partnerships Project II:

Created 48 partnerships to increase rural

competitiveness and build up rural

entrepreneurship in poor rural communities

Agriculture Transition:

Increased the competitiveness of Colombian

agriculture and improved the accessibility of

export-potential products to international markets

by strengthening National Agricultural Science

and Technology and Sanitary and Phytosanitary

Systems through the joint participation of both

the public and private sectors.

Infrastructure Development

Structuring, financing, and continuing support of

Ruta del Sol infrastructure project (a 950-km

highway connecting Bogotá to the Caribbean coast)

reducing travel time by 8 hours

Expand coverage and quality of public services

and social protection targeted to poor. Main

outcomes include:

ACHIEVED

Infrastructure Investments:

Expanded country‘s logistic infrastructure

through IFC investments in national ports in

Muelles El Bosque (Cartagena), SMITCO (Santa

Marta) and TC Buen (Buenaventura)

Offered advisory services for structuring and

implementation of Ruta del Sol bidding process

(IFC). The project was successfully awarded to 3

concessionaires through a competitive tender

Financial Services:

Bogota Urban Services AF (FY09/FY12/(S/HS))

Science, Technology and Innovation (FY11/FY14/(S/S))

Cartagena Bus Rapid Transit (CF) (FY11/FY14)

Investment with Municipality of Bogota (IFC)

CTF Bogota Transport SITP

Integrated Mass Transit Systems (AFII)

(FY04/FY12/(HS/S)

Water and Sanitation Sector Support

(FY05/FY11/(MS/MS)

La Guajira Water and Sanitation (FY07/FY12/(MU/MU)

60

CPS Outcomes Status and Evaluation Summary IBRD/IFC Interventions

Approval/Completion-date/ICR/ISR(DO/IP)

Rating

SUSTAINABLE EQUITABLE GROWTH Public Services

Inhabitants of 7 cities gain access to rapid mass

transit though extension of Transmilenio model

10-15 departments carry out modernization

plans resulting in improvement in the quality

of water and sanitation service, including

coverage, continuity, pressure, and water

quality

Water and Sanitation Sector Support Project Improve access to safe water and sanitation

process with domestic and international bidders

Bogotá Urban Services:

Improved quality of life of low income families

by increasing access, coverage, quality,

reliability, and inter-agency coordination in the

provision of water, sanitation, transport and

related basic services.

Improved city's mobility by providing better

access to the public transport system, and

improving road safety, traffic management and

transport planning.

Strengthened the institutional and administrative

framework for an efficient and sustainable

delivery of urban services throughout the city.

Mass Transport Systems Project:

Systems operating in 4 cities (2 more in 2011)

Approx. 1.7 million people per day use

Transmilenio in Bogota (140,000 in Pereira)

Water & Sanitation Support project:

1.4 million consumers receiving improved access

to reliable and safe water supply (target: 1.2

million).

271,072 consumers receiving improved sewerage

services

Water Sector Reform Assistance:

The Project was successful in widening and

Water Sector Reform Assistance (FY02/FY11/(S/S)

Cartagena Water Supply, Sewerage and Env.

Management(FY00/FY09/ ICR: S)

Colombia Natural Gas (Fy06/Fy08)

Knowledge Services:

PPIAF - Urban Renewal Financing Instruments

BRTS Video/Documentary

Participation in 3rd Road Safety Seminar

Participation in IDB Metro Conference

Mass Transport Systems series preparation (TFs)

Regulatory Aspects of Transport

Nordic Fund for Universal Access to BRTs

Pilot Impact Evaluation Pereira BRTs

Metro Study, Integration Public Transit System, SNTA (3

cities)

Safeguard Workshops

Procurement Seminars with local BRTS teams

Coordination/Convening Services:

Tax Increment Financing Study Visit

Launching of Transport on a Human Scale

South-South collaboration and knowledge transfer

originating from the Colombian experience. Over 20

countries, including China and Vietnam visited to learn

about the NUTP.

61

CPS Outcomes Status and Evaluation Summary IBRD/IFC Interventions

Approval/Completion-date/ICR/ISR(DO/IP)

Rating

SUSTAINABLE EQUITABLE GROWTH strengthening the pool of competent operators in

the water sector in the Caribbean region of

Colombia. Under the overall program, 36

municipalities in the Caribbean region now have

specialized operators; twenty five of these

municipalities received World Bank financing.

Improvements in service were demonstrated

through: approximately 1.3 million people in the

lower economic stratum (1, 2, and 3) receiving

improved water supply service; an increase in the

water supply infrastructure coverage for medium-

sized cities from 61% to 85%; an increase in

continuous supply from 2% to 53% for the total

Project population and; improved operational and

commercial performance of the operators as

measured by collection rate (85%-96%), micro-

metering (> 80%), and falling operating costs.

All participating cities have responsible and

dedicated operators; users are aware of efforts,

implemented works, and improvements, and are

satisfied with the results.

Cartagena Water:

There is now universal water service coverage

throughout the city, including the poorest

neighborhoods. Cartagena‘s water coverage

increased from 80 percent to 99.9 percent from

2000 to 2009, corresponding to 78,300 new

water connections.

· Cartagena‘s sewerage coverage increased from

69 percent to 86 percent from 2000 to 2009,

adding 66,900 new sewer connections.

· There are improved sanitary conditions for the

low-income communities located in the Cienaga

drainage basin and for the city in general as a

62

CPS Outcomes Status and Evaluation Summary IBRD/IFC Interventions

Approval/Completion-date/ICR/ISR(DO/IP)

Rating

SUSTAINABLE EQUITABLE GROWTH result of the improved wastewater collection and

conveyance system.

There is an on-going dispute between the Project

implementing entity and the outfall contractor.

Final outfall construction is underway with

Government counterpart funds. The Bank is still

involved in supervision and the ICR will be

updated once project completed.

Natural Gas Distribution for Low Income

Families in the Caribbean Coast Project:

Connected up to 35,000 household to the natural

gas distribution network

Provided 35,000 households with three months of

service after connection.

CPS Outcomes Status and Evaluation Summary IBRD/IFC Interventions

Approval/Completion-date/ICR/ISR(DO/IP)

Rating

POVERTY ALLEVIATION AND EQUITY

Social Protection

Ensure access to quality education, with joint

federal/local programs reaching students in the

poorest rural areas of the country (around 20%

of jurisdictions)

Human Capital Formation

Strengthening education at secondary and tertiary

levels with more focus on quality than coverage

by:

Promote early childhood development through

innovative conditional cash transfers and better

targeted social and infrastructure services to the

ACHIEVED

Social Safety Net Series:

2.7 million poor, displaced and indigenous

families enrolled in Familias en Acción

Supported the improvement of the country‘s

social protection systems through financing and

technical assistance for social safety net

Uniminuto:

Uniminuto transaction will reach a total

enrollment of 44,000 students by 2015, half of

which will be women.

LaRSDPL:

Financial Services:

Social Safety Net II (FY09/FY12/(S/S))

Social DPL (FY10/FY11/(S/S))

Rural Education APL II (FY08/FY14/(MS/MS)

Antioquia Secondary Education (FY08/FY13/(S/S))

Higher Education Improving Access (FY03/FY09/ICR:S)

Second Student Loan APL (FY08/FY12/S/S)

Uniminuto Education Access (IFC)

Local currency financing for ICETEX, Identification of

client‘s risk management needs

Loan customization

Knowledge Services:

Education Quality I ESW (FY08)

Multi-year programmatic AAA – Health, Education,

63

CPS Outcomes Status and Evaluation Summary IBRD/IFC Interventions

Approval/Completion-date/ICR/ISR(DO/IP)

Rating

POVERTY ALLEVIATION AND EQUITY

poor

Expanding enrollment and reducing dropout

rate, targeted to students from lower-income

families (ICETEX-ACCES loans for tertiary

education reach 210,000 new students during

CPS period)

Initiating Antioquia Education project pilots

state-level mechanisms for improving secondary

education enrollment and quality, benefiting

22,000 local students

Strengthened Colombia's social protection

system and improved the delivery of social

services, (b) raised human capital formation, (c)

improved employability, and (d) enhanced

monitoring and evaluation systems for better

transparency, social oversight, and results

management in the social sectors.

Poverty and Jobs – (i) Promoted initiative (DNP-

led) of having a comprehensive monitoring

system to measure impact of social crisis, (ii)

strengthened institutional capacity of Government

to refine system to measure poverty and a

multidimensional approach with the Human

Opportunity Index

Pensions – Provided inputs for discussion on the

importance of expanding coverage with an

integral approach

Cajas de Compensación – Added new elements

to discussion on cost-benefit of services financed

with the Parafiscales

Engagement in Health Sector Reform:

Improved quality of health care and guaranteed

financial and institutional sustainability of a

universal and unified health insurance system by

developing proposals to reform the sector and

pilot cases

Empowering Young Women Affected by

Violence:

Improved skills of mostly young single mothers,

who have been displaced by violence in country, enabling them to integrate in formal economy

Social Protection

Engagement in the health sector reform through NLTA

Innovative arts-based education to displaced and violence

affected communities (TF)

Policy Notes on ECD and quality of education, and social

protection

Workshops on improving social protection for the

unemployed, including through reforms in unemployment

insurance.

Target SMEs and student lending (IFC)

Leverage guarantees with knowledge institutions (IFC)

Informality Programmatic ESW (FY08)

Poverty and Jobs TA (FY08)

Poverty and Jobs II TA (FY09)

Poverty Monitoring TA (FY10)

Access to Opportunities for Young People (TF)

Empowering Young Women Affected by Violence (TF)

Inequality of Human Opportunities Index

Policy Note on labor markets

Labor Market Policies for the Poor

Transition from school to work & labor markets

Analyze health financing system

Pension (multifunds) support

Labor markets: reforming Cajas de Compensación

Familiar (CCF)

Piloting financial literacy programs (IFC)

Coordination/Convening Services:

Active participation in expert committee on poverty

measurement

International conference on poverty measurement

Support to M&E Network

Colombia a leading member of the CCT community of

learning facilitated by the Bank.

Participation in international conference organized by

Colombia on urban CCTs.

64

CPS Outcomes Status and Evaluation Summary IBRD/IFC Interventions

Approval/Completion-date/ICR/ISR(DO/IP)

Rating

POVERTY ALLEVIATION AND EQUITY

(through the Japanese Social Development Fund).

Rural Education APL II:

Ministry of Education has signed official

agreements with 16 participating territorial

entities and 9 of them have already made financial

contributions to the project. All 16 entities have

viable and approved rural education plans and

execution of subprojects is well underway. In

2011, approximately 12,000 teachers will be

trained in the use of information and

communication technologies.

Education ACCES Project:

Benefited 175,427 new students with ACCES I

students loans

Benefited 89,287 new students with ACCES II

student loans; 75,052 of these students came

from the 2 lowest socioeconomic strata (between

June 2008 and December 2010)

Antioquia Education Project:

Increased upper secondary completion rate in the

poorest areas from 81.2% to 90% (Progress:

89.64% - 6/30/10)

Increased educational attendance to 10% in

gross enrollment (Progress: 46% in 2007 to 56%

in 2009)

Granted 5,944 CCT to secondary school students,

including 119 indigenous (Progress: 21.8%;

27,222 planned for 2013)

Second Student Loan Support Project:

Coordination/Convening Services:

Roadshow launching of the WDR

Development Marketplace 2010 in Bogota

Insurance for the Extreme Poor - Bancoldex (recipient-

executed activity)

South-South high-level conference

ALAS – Colombia University and World Bank

partnership on ECD

Support dialogue on ECD at Ibero-American Summit

65

CPS Outcomes Status and Evaluation Summary IBRD/IFC Interventions

Approval/Completion-date/ICR/ISR(DO/IP)

Rating

POVERTY ALLEVIATION AND EQUITY

Increased coverage and equity of tertiary

education system since program began in 2008.

Reached 69.2% of students graduating from

secondary education and continuing to enroll in

tertiary education (from 65% in 2008)

66

CPS Outcomes Status and Evaluation Summary IBRD/IFC Interventions

Approval/Completion-date/ICR/ISR(DO/IP)

Rating

ENVIRONMENT AND NATURAL RESOURCE MANAGEMENT

Provide input to national policy and help

Government strengthen the institutional capacity for managing environmental services and

mainstreaming principles of environmental

sustainability. Milestones include:

Approval and implementation of a national policy

on environmental health, covering water quality,

urban and indoor air quality, and results Strategic

Environmental Assessments (SEAs).

MAVDT Climate Change Unit strengthened and

able to meet the environment goals of the 2006-

2010 NDP

Implementation of system to monitor and evaluate

national and regional environmental management

based on 6 sustainable development objectives

linked to MDGs

MAVDT Water Resources Unit adapted in line

with new water resource management reform

Assist Government to reach MDG 7 (Ensure

environmental sustainability), focusing on

following subgoals:

Promote integrated water management knowledge

measured by increase in percent of municipalities

that have implemented Watershed Administration

and Management Plans

Strengthen environmental governance measured

by increased transparency, accountability, and

public participation in environmental license

ACHIEVED

Led to the government initiative of reducing

sulfur content in diesel from 1,200 ppm to 50 ppm

in Bogota (Sustainable Development DPL series)

Fostered design and implementation of policy

reforms through substantial lending in sustainable

development (Sustainable Development III DPL)

Increased awareness on coastal wetland

protection, conservation of national protected

areas, and Ecosystem Management (GEF

initiatives)

Disaster Vulnerability series:

Enabled Ingeominas to increase disaster

prevention monitoring through assisting in the

procurement process for the necessary equipment

Mainstreamed disaster risk management

throughout health, education, social sectors and in

the country

Increased interest and investment in disaster risk

management and reduction, and vulnerabilities

Resettled 1,052 out of 1,075 households living in

high-risk areas in permanent housing as of June

30, 2010.

Retrofitted/reconstructed many schools and

kindergardens to seismic resistant standards.

Reduced population at risk in public buildings

from 575,000 to 252,000 (achieving beyond the

end of project target of 450,000) as of June 30,

2010,

Slower progress of retrofitting and repositioning

of health infrastructure

Financed reconstruction /rehabilitation of 36

schools (14 out of 22 elementary schools

completed (target of 40)

Financial Services:

Sustainable Development II and III DPL

(FY07/FY10/(HS/S)

Sustainable Development Investment (FY06/FY12/S/S)

Solid Waste Mgmt. (FY10/FY14/(S/S))

Rio Bogota Environmental (FY11/FY16)

Biodiversity in Sustainable Cattle Ranching (GEF)

(FY10/FY16/(S/S)

Integrated Silvopastoril Eco Mgmt. (GEF)

Andean Conservation and Use of Biodiversity

(GEF)(FY01/FY08/ICR:S)

Conservation of Protected Areas

(GEF)(FY06/FY12/(S/S)

Mangrove Restoration and Carbon Sink (CF)

Rio Frio Waste Mgmt. /Jepirachi (CF)

Corporate Citizenship Facility (IFC)

Thermal Efficiency Investments (IFC)

Enhancing Local Benefits Business Line (IFC)

APL1 Disaster Vulnerability (FY05/FY12/(S/S))

APL2 Disaster Vulnerability(FY06/FY11/(HS/MS))

CAT DDO (FY09/FY12/(S/S)

Use of full menu of IBRD CAT risk financing

instruments weather

Knowledge Services:

Energy-Mining:

Alternative Energy ESW (FY09)

Renewable Energy Sector Policy II (TF)

Alternative Energy and Bio-energy (TF)

Low Carbon Growth

Rio Amoya CF, Jepirachi CF, San Nicolas Carbon Sink

CF

Extractive Industries Transparency Initiative EITI TA

67

CPS Outcomes Status and Evaluation Summary IBRD/IFC Interventions

Approval/Completion-date/ICR/ISR(DO/IP)

Rating

ENVIRONMENT AND NATURAL RESOURCE MANAGEMENT process; improved identification of environmental

priorities as a result of increased use of SEAs

mainstream environmental considerations into

policy

Prevention/control of environmental degradation

by improving quality of urban water bodies,

decreasing the number of open waste dumps, and

implementing air pollution control strategy; and

under National Protected Areas GEF, improved

management systems by project year 5 of at least

2 million hectares of core conservation areas

(national parks) and 20% of conservation mosaics

Dialogue on climate change and renewable energy

leads to increased sources of renewable energy

and leadership role for Colombia in promoting

South/South exchanges on climate change

IFC:

Developed investment opportunities in

cooperation with financial institutions and

companies interested in energy efficiency and

renewable energy

Maximized WBG impact in environmental

sustainability by complementing Bank‘s use of

grant instruments and leveraging private sector

investments

National Protected Areas GEF:

Met target of 2.2 million hectares of core

conservation areas (9 NPAs) with management

plans in place and 1.4 million hectares with

sustainable natural resource practices in place

Met target of 3 surrounding territories

implementing activities that promote ecological

connectivity through biological corridors and

restoration practices

Exceeded target with 9 NPAs implementing

specific conservation management subprojects

(target: 7)

Met target of 30% of families adopting

sustainable production systems (68% over

baseline)

Amoya Environmental Services TF:

Started environmental education and awareness

on role and services of Paramo

Awarded education grants

Upgraded April, 2010: Schooling program and

facilities of 23 rural schools (April 2010)

Awarded full scholarships to 30 local children to

pursue studies at Universities throughout the

country

(FY09)

Policy Options for Renewable Energy TA (FY10)

Water Resources:

Water Resource Model

Water Resources and Air Quality Management

Institutional Assessment and Mineral Rights Cadastre

Flood Protection in Barranquilla (Supervision

funds)

Preparation Funds for urban flood prevention (GFDRR)

Application of the Earth Simulator for River Stream

Flows (Knowledge Transfer)

Environment:

Administration of Dutch Resources for National

Protected Areas (TF)

Conservation Incentives for Land Mgmt. (TF)

National Adaptation Plan (TF)

INAP GEF, Mainstreaming Cattle Ranching GEF,

Protected Areas GEF, Netherlands Conservation

Incentives Grant

GEF Protected Areas AF

Risk Modeling Bogota (GFDRR)

CAPRA (GFDRR)

Coordination/ Convening Services:

Identification mission for Potential Flood Mitigation

Project

Technical Discussions for disaster impact analysis and

evaluation (CAPRA)

Presentation at SNPAD (National System for Prevention

and Attention to Disasters) 20 years, MHCP Risk

Financing Workshop, Bogota Sharing Experiences Event,

ACODAL (Colombian Association for Sanitary and

Environmental Engineering) Annual Meeting

Workshops CEA Update study

Course on hydrological modeling for decision makers

(WPP financed)

68

CPS Outcomes Status and Evaluation Summary IBRD/IFC Interventions

Approval/Completion-date/ICR/ISR(DO/IP)

Rating

ENVIRONMENT AND NATURAL RESOURCE MANAGEMENT

International Glacier network

―Grandes Sismos‖ Workshop

Assessment of Changes in bio-climatic Conditions in

Paramo Ecosystems (KT)

Closing Workshop Biosafety Mgmt. to comply with

Cartagena Protocol

Workshop Multi-country project to strengthen biosafety

systems

Technical Assistance for Sustainable Development

reforms

Regional study on climate change – forum with high level

participation from GOC and experts

69

CPS Outcomes Status and Evaluation Summary IBRD/IFC Interventions

Approval/Completion-date/ICR/ISR(DO/IP) Rating

PEACE AND DEVELOPMENT

Contribute to effectiveness of

Government’s peace initiatives by

increasing awareness of global

experience and piloting innovative models

of participatory community development in

conflict-affected zones by:

Providing technical advice on models of

intervention for demobilized and

displaced

Contributing to design of national

reparation program

Extending models of participatory

community development in conflict-

affected zones (level of implementation

of Annual Operation Plan in each of the

5 project regions)

Going forward on IDP and with special

focus on vulnerable groups in urban

areas

ACHIEVED

Protected patrimonial assets of population at risk

of displacement or already displaced

Derived framework from lessons learned to

formulate a policy for land restitution under new

Government

Increased awareness of peace process and called

upon civil society by the launching of ―Voices‖

Enhanced synergies among the National

Commission for Reparation and Reconciliation

and the High Counselor for Reintegration, and

gave advice and financing

Peace and Development Series:

At least 80% of targets are met in food security,

basic sanitation, and productive subprojects for

returned or relocated families

Benefited 6,478 families (81%) with food security

Benefited 7,900 families (46%) with income/job

opportunities

Benefited 4,572 families (76%) with housing

improvements

Benefited 75,000 families (poor, vulnerable and

displaced) from productive subprojects

Disseminated total subsidiary agreements and

other contracts totaling US$29.4 million by

October 2007 (98% of loan).

Implemented 100% of Annual Operation Plans in

Financial Services:

Peace and Development (AF) (FY04/FY13/(S/MS)

Knowledge Services:

Peace Programmatic III (FY09)

Youth reintegration project (Colegio del Cuerpo)

Peaceful Dispute Resolution Services for the Poor

Capacity Building in the Pacific Coast (Afro-Colombians)

Gender and IDPs

Strengthening Human Rights to Basic Social Services in Peace and

Development Zones

Support for South-South Dissemination on DDR

Protection of Land and Patrimony of IDP (TF)

Publication of ―Voices‖ (June 2009)

70

CPS Outcomes Status and Evaluation Summary IBRD/IFC Interventions

Approval/Completion-date/ICR/ISR(DO/IP) Rating

PEACE AND DEVELOPMENT each of the 5 regions (April, 2010)

Received satisfactory financial and procurement

audits from partner organizations

Recorded a 38% reduction of overall displaced

population between 2004-2009

Human Rights Project:

Assisted in identification of effective links, with

regard to human rights, between nature and work

of the Regional Peace and Development

Programs, Government, other partners, and the

Bank

Promoted introduction of human rights good

practice in peace and development interventions

Afropaz:

Strengthened Afro-Colombian organizations by

assisting in construction of social networks,

empowering communities to promote local

development, and improving Access to

Opportunities for Youth

71

CPS Outcomes Status and Evaluation Summary IBRD/IFC Interventions

Approval/Completion-date/ICR/ISR(DO/IP)

Rating

A STATE AT THE SERVICE OF CITIZENS

Improved public sector management and

citizen services in support of Central

Government efforts:

Implement a M&E system within DNP to

improve existing SIGOB information system

for citizen control, including pilots in 2-3

subnational entities to enhance data

collection and processing

Strengthen capacity of central and

subnational entities to manage resources and

deliver social services in an efficient and

transparent manner, promoting good practice

models in procurement, anticorruption, and

transparency

Improve government-citizen service linkage

through better communication, identification

of citizen needs, and one-stop service centers

to ease registration and access to government

services

Strengthen services to tax payers to

contribute to DIAN efforts to improve

revenue collection procedures and expand

the tax base

Improve implementation of country systems

ACHIEVED

TAL - Strengthening Public Information,

Monitoring, Evaluation for Results

Management

SIGOB system was replaced by more modern

SISMEG. Also, an Evaluation System was

introduced, as well as a National Network of

M&E institutions. Technical guidelines on

M&E practices at the territorial level

developed and budgets of Medellin and Pasto

used them to present Performance Based

Budgets to their Municipal Councils.

Developed Rapid Assessment and Action Plan

(RAAP) - completed and tested for 2

municipalities and improved public

management capacity by providing Barranquilla

and Cartagena with a solid roadmap

Improved and expanded municipal capacity by

Central Government

TAL to support the 2nd PSAL:

Increased number (3 to 13) of social/labor

programs under DNP, MSP, and MEN being

systematically and rigorously monitored,

evaluated, and discussed with the public

(06/30/09)

Financial Services:

Strengthening Public Mgmt. M & E (FY09/FY14/(S/S))

Consolidation of Public Mgmt. Systems

(FY10/FY13/(S/S)

Justice Services Strengthening (FY10/FY14/(S/S))

Education quality project (ICFES - IFC)

TAL to Support the Second Programmatic Labor Reform

and Social Structural Adjustment Loan

(FY05/FY09/(S/S))

Knowledge Services:

National Level Public Financial management and

Procurement Report (FY09)

Decentralization Programmatic TA (FY10)

Institutional and Community Strengthening for Local

Governance (TF)

Installing Basic Mgmt. Capacity in Chocó (TF)

Strengthening of the Procurement System (TF)

Preparation of National Standard Bidding Documents

Strengthening Social Accountability to Improve the

Impact of Royalties (IFC-TF)

Peaceful Dispute Resolution Services for the Poor (TF)

Legal claims mgmt system (IDF, TF)

Assessment for e-GP and Road Map Strategy

Advisory work on accounting and financial reporting

standards

TA on the review of the current subnational control

systems

Revenue management advisory services in gold mining

(IFC)

72

CPS Outcomes Status and Evaluation Summary IBRD/IFC Interventions

Approval/Completion-date/ICR/ISR(DO/IP)

Rating

A STATE AT THE SERVICE OF CITIZENS Public Financial Management:

Supported achievement of 95% of national

budget managed through SIIF (90% achieved,

12/31/2009)

Contributed to having 1.5 million taxpayers

updated and reviewed (4.6 million updated,

12/09)

Expanded DIAN Integrated Tax and Customs

Administration Model – (Restructuring decree

on the model issued, 12/09)

Reached proportion above 75% of tax revenue

paid voluntarily and on time for both VAT and

for income tax (above 96% for both indicators)

Improved efficiency of public financial

management, expanded access to information,

and established greater transparency

Co Consolidation of National Public Management

Information Systems:

Supported creation of the Management and

Planning System for the Government (SIGOB),

a fairly advanced system of monitoring and

evaluation of government programs

Coordination/Convening Services:

Conference on results informed budgeting (FY08)

Fifth Annual Conference of the LCR Monitoring and

Evaluation Network (Nov/09)

Seminar to discuss strategies to improve assessment

methodology of subnationals

South-south transfer health sector regulation.

73

CPSCR Annex 2: Indicative versus Actual Lending Program for the FY08-11 Colombia CPS (US$M)

CPS CPSPR CPSCR

FY08 FY09 FY10

FY08 FY09 FY10

(Pipeline) FY11

(Unconst.)

FY10 FY11

INVESTMENT OPERATIONS

Antioquia Education 20 20

Productive Partnerships 30 30

Access to Higher Education 300 300

Promoting Rural Education 40 40

Departmental Water and Sanitation 75 Dropped

Building National M & E Systems 9 8.5

Social Safety Net/Familias en Acción 636.5

Improving Municipal Services Dropped

Bogota Urban Services (AF) 30

Macro-Urban Projects/Low Income Land and Housing 40

Solid Waste Management 20

Justice Services Strengthening 20

Peace and Development (AF) 7.8

Integrated Mass Transport Systems (AFII) 300 300

Science, Technology and Innovation 25 Slipped 25

Rio Bogota Environmental 250 Slipped 250

Consolidation of National Public Information Systems 25 25

Education System Modernization 20

21

Slipped to FY 12

MAFP IV 100 Dropped

National Urban Transport Project 250

350

Slipped to FY12

Ruta del Sol/Road Infrastructure 500 Dropped

Investment Operations Total 474 390 675 600 870 373 315

74

FY08 FY09 FY10

FY08 FY09 FY10

(Pipeline) FY11

(Unconst.)

FY10 FY11

DEVELOPMENT POLICY LENDING/DDO

Business Efficiency III DDO Up to 650 550

(DPL)

Sustainable Development III DPL 450

Disaster Risk Management DDO 150

Financial Sector DPL 300 300

Social DPL 500 500

Development Policy Total 650 550 600 800 800

TOTAL Annual Lending 1,124 1,000 1,000 940 1,275 1,400 870 1,173 315

75

CPSCR Annex 3: Indicative and Actual Knowledge (AAA) Program for the FY08-11

Colombia CPS

Planned at

Beginning

CPS

Actually Delivered at CPS

Completion (CPSCR)

Knowledge Services FY

08 FY09

FY08 FY09 FY10 FY11

Education Quality

Informality Programmatic

Poverty and Jobs for the Poor

SME Finance

Money Market Development

High Level Seminar on Climate Change

Alternative Energy

National Level Public Finance

Extractive Industries Transportation Initiative

Financial Sector Access

Poverty and Jobs for the Poor II

Peace Programmatic III

Supervision of Financial Conglomerates

CS Crisis Simulation Exercise

Extractive Industries Transportation Initiative

Education Quality II

Sub-National Capacity Building Dropped

Private Pensions Cost and Regulation Dropped

Support to Transfer Reform Dropped

Health System Modernization

Policy Option for Renewable Energy

Decentralization Programmatic

Financial Conglomerates Supervision

Strengthening Social Protection

Poverty Monitor

Strengthening the Crisis Preparedness Framework

Poverty Measurement HOI & Labor Markets

76

Corporate Governance ROSC Assessment

Country Assessment GCMCG

Policy Notes

77

Annex C: The Impact of Higher Food and Commodity Prices in Colombia

As a net exporter of food, Colombia can reap benefits from higher agricultural prices. In 2010,

the country exported around US$5.7 billion (14 percent of total goods exports) of agricultural

products and processed food and showed a food trade surplus of US$1.9 billion (0.7 percent of GDP).

The main export product is coffee (US$2.2 billion), followed by vegetables and fruits (US$860

million) and sugar (US$674 million). In spite of the commodity boom, Colombian agricultural

exports have lost global market share, declining from an average 0.68 in the period 1995-1999 to 0.55

in 2000-2009. Nonetheless, Colombia has a great potential to expand agricultural production and

exports and the Government is taking measures to increase productivity.

In contrast with global trends, food price inflation in Colombia is declining. Food price inflation

fell from 4.8 percent to 2.8 percent between January and April 2011. As of April 2011, food inflation

contributed by 0.8 percentage points to the overall rate of 2.8 percent (the weight of food items in the

Consumer Price Inflation index is 28.2 percent). This trend is consistent with IMF (2011) estimates of

the pass-through from world to domestic food prices. Colombia has the lowest estimated pass-

through among major Latin American economies (about 0.1), which is not even statistically

significant. Local food prices could, however, increase in the future since the impact of the last global

food price shock in 2008 appeared with a time lag (see Figure C1a). Given that poor people devote a

higher share of their household budgets to food, they experience a higher rate of inflation than the rest

of the population when food prices rise. In April 2011, the inflation rate of low-income groups was 33

percent higher than high-income groups and 2 percent higher than the middle-income group.

Figure C1a. Food price inflation (yoy, %) Figure C1b. Oil and transport inflation

(yoy, %)

Source: World Bank (GEM) and DANE.

Colombia is a net exporter of oil, coal, gas, and metals, and experiences benefits as well as

challenges of higher prices. In 2010, export of these commodities reached US$25.6 billion and

contributed by 63 percent to total goods exports and by 73 percent of foreign direct investment

(US$4.9 billion). Commodities also contribute by about 12 percent to total fiscal revenues. Higher

commodity prices increase export and fiscal revenues thereby improving both the external current

account and fiscal balances. On the other hand, higher foreign exchange inflows add to appreciation

pressures, which potentially undermine the competitiveness of non-commodity exports. Colombia

can also not escape the negative impact of higher oil prices on the global economic recovery, and is

particularly sensitive to developments in the US – its largest trading partner. Recent measures taken

by the government to manage commodity revenues, such as the introduction of stabilization funds at

the national and subnational levels, are supported by this operation.

Global food inflation (left axis)

Colombia food price inflation

(right axis)

-4

1

6

11

16

-40

-20

0

20

40

60

80

Mar

-06

Sep

-06

Mar

-07

Sep

-07

Mar

-08

Sep

-08

Mar

-09

Sep

-09

Mar

-10

Sep

-10

Mar

-11

WTI priceinflation(left axis)

Colombia transport inflation

(right axis)

-6

-4

-2

0

2

4

6

8

10

-60

-40

-20

0

20

40

60

80

100

Mar

-06

Sep

-06

Mar

-07

Sep

-07

Mar

-08

Sep

-08

Mar

-09

Sep

-09

Mar

-10

Sep

-10

Mar

-11

78

The inflationary impact of higher global oil prices is modest owing to government intervention,

but local fuel prices are likely to increase in the future to ensure fiscal balance. In 2008, the

Government abolished direct fuel price subsidies and introduced a Fuel Price Stabilization Fund,

which works on the following basis. During periods of low global prices, local pump prices are kept

relatively higher and this gives rise to savings. In spells of high oil prices, local prices are raised, but

not fully, with the difference paid for by drawing down the savings of the Fund. Given this

mechanism, local transport prices have only followed the rise in global crude oil prices to some extent

in recent months (see Figure C1b). Econometric estimates of the pass-through suggest that it is the

lowest in the region (after Mexico) at about 0.175 and statistically significant, according to the IMF

(2011). While the mechanism may work well in theory, the timing of its implementation gave rise to

only a limited period of relatively low world prices and savings accumulation followed by a period of

high prices. As a result, the Fund recently exhausted its savings in end-2010 and registered a deficit

of COP950 billion or US$530 million in end-April 2011. To avoid fiscal imbalances, further local

price increases would thus be necessary.

79

Annex D: Recent Trends on Poverty and Inequality in Colombia

Colombia is not a poor country, but it is a country with a lot of poor people. The poverty rate

and gap observed for Colombia is far greater than one would expect based on the level of

Gross National Income per capita observed in the country (Figures D1 and D2).

Figure D1. Poverty and per capita GNI relationship

Figure D2. Poverty Gap and per capita GNI relationship

Part of this is due to the high and persistent income inequality in Colombia. Between 1995

and 2009, a period when most LAC countries observed an unprecedented reduction on

inequality, Colombia experienced a relatively stable Gini Index (Figure D3a). Poverty

reduction during the 2000-2009 could have been stronger if Colombia had experienced more

80

equitable economic growth (leading to lower inequality). Figure D3b simulates what would

have happened to poverty in 2009 if Colombia‘s distribution of income was similar to that in

other LAC countries. For instance, had Colombia‘s Gini been similar to that of Mexico,

moderate poverty would have been 38 percent; while if it had been at the level of Uruguay

(the lowest in the LAC region), poverty would have been 26 percent.

Figure D3a. Evoluation of Gini for Colombia and LAC

Figure D3b. Poverty in Colombia if the country had the Gini of selected LAC countries (Colombia

average income from 2009 constant)

Poverty (extreme and moderate) reduction in Colombia between 2000 and 2009 was entirely

driven by growth, as inequality remained largely constant. During this period, Colombia

experienced an average growth rate above the regional average. The Datt-Ravallion

decomposition (Table D1) suggests that, on average, 46 percent of the poverty reduction

between 2000 and 2009 among LAC countries can be attributed to growth and 54 percent to

redistribution. In the case of Colombia, the share due to growth was 97 percent, while falling

inequality contributed only 3 percent. The growth incidence curves for Colombia for 2006-

2009 suggest that the middle class benefited the most from the income growth experienced

(Figure D4).

0.55

0.57

0.56

0.570.58

0.57

0.55

0.53

0.5

0.51

0.52

0.53

0.54

0.55

0.56

0.57

0.58

1995 2000 2005 2009

Gin

i

Colombia LAC

Note: 70% of the LAC population; LCSPP s calculation based on SEDLAC data.

Colombia

Brasil (2009)

Mexico (2008)Ecuador (2009)

DR (2007)

Peru (2009)

Uruguay (2009)

20

25

30

35

40

45

50

0.3500.4000.4500.5000.5500.600

Po

bre

za (%

)

Gini

Source: LCSPP calculation based on SEDLAC data.

81

Table D1 Datt-Ravallion Decomposition for Selected LAC countries

Growth Resdistribution

Countries 2000-2005 2005-2009 Average 2000-2005 2005-2009 Average Brazil 0.25 0.51 0.38 0.75 0.49 0.62

Chile 0.43 0.57 0.50 0.57 0.43 0.50

Colombia 0.98 0.97 0.97 0.02 0.03 0.03

Mexico 0.43 0.54 0.49 0.57 0.46 0.51

Panama 0.61 0.80 0.71 0.39 0.20 0.29

Peru 1.40 0.99 1.20 -0.40 0.01 -0.20

LAC 0.32 0.60 0.46 0.68 0.40 0.54

Source: LCSPP calculation based on SEDLAC data.

The relatively high poverty levels in Colombia are partially explained by the relatively high

levels of food prices. Table D2 shows the results of the International Comparison Program

(ICP) 2005 prices indexes for food items for LAC countries. This analysis shows that food

categories in Colombia were higher than regional average in 23 out of 29 categories (by an

average of 16 percent). The high cost of logistics (ranking of 82 in the WDI Logistic Cost

Index)4 the worst of the LAC region is expected to be a major factor behind the high food

prices.5 Evidence suggests that logistic costs represent between 20 to 50 percent of food

prices.6

Table D2 Food price levels of LAC countries (ICP 2005) Country Food Price Level

Index (World = 100)

Venezuela 98

Chile 90

Colombia 84

Brazil 77

Peru 77

Uruguay 77

LAC 77

Ecuador 74

Argentina 65

Bolivia 50

Paraguya 47

Source: World Bank, 2005 International Comparison Program: Tables of Final Results. (Washington, DC, 2008)

4 World Bank. 2010. World Development Indicators. http://data.worldbank.org/ .

5 Schwartz, J. Mejorando la competitividad de Colombia. Portafolio, 15 de Deciembre de 2009

6 World Bank. Logistics, Transport and Food Prices in LAC: Policy Guidance for Improving Efficiency and

Reducing Costs. Preparatory workshop for the Second Meeting of the Finance Ministers of the Americas and

the Caribbean (2009).

82

Figure D4. Growth incidence curves from 2005 to 2009

83

Annex E: Fiscal Risk Management in the Colombian Public Sector

I. INTRODUCTION

Fiscal risks can be broadly defined as deviations of fiscal outcomes from what was expected as the

time of the budget or other forecast7 and can arise from both revenues and expenditures, principally

as a consequence of exogenous shocks such as volatility of currency and interest rates, closure of

international financial markets, natural disasters, volatility of commodity prices, etc., combined with

the Government‘s exposure to these shocks. The time horizon should be defined for quantification

and management of fiscal risk; in Colombia‘s case, it could include reference8 to the Government‘s

Medium-Term Fiscal Framework (MTFF) in the next five to ten years, as well as next year‘s budget

and possibly other fiscal forecasts.

The Colombian authorities are well along the curve of identifying, quantifying, and managing various

types of fiscal risks. The authorities acknowledge the obligation to address many of the potential risks

— direct and indirect, explicit and implicit — by including them in the MTFF and in setting fiscal

targets. However, it would be prudent for the authorities to decide on an explicit strategy for dealing

with remaining sources of medium-term budgetary risk arising from factors such as natural disasters.

II. SOURCES OF FISCAL RISK

Initially the analysis has been limited to the central government balance sheet,9 although the MTFF

also applies to the consolidated public sector. The analysis includes the accounting balance sheet, an

expanded ―fiscal‖ balance sheet, and contingent assets and liabilities, both explicit and implicit.

Figure E1 Figure E2

The government asset and liabilities with potential fiscal risk can correspond both to an accounting

and a fiscal simplified balance sheet (Figure E1). The Colombian Government has an accounting

balance sheet so the main items could be analyzed in terms of fiscal risk, namely, identifying and

ideally quantifying how much the value of the asset or liability change, given a movement in the

7 Cebotari and others, Fiscal Risks: Sources, Disclosure and Management, (IMF, FAD, 2009).

8 Country Insurance: Reducing Systemic Vulnerabilities in LAC (World Bank, Nov.2007), which concludes that countries

should cover themselves against insurable external shocks, providing insurance is offered at reasonable costs, and having

considered main fiscal risks arising from exogenous shocks. 9 Ideally it would be extended to the public sector as a whole, due to the decentralized nature of the Colombian Government.

84

source of risk (e.g., interest rates, currencies). The bottom items refer to a ―fiscal balance sheet‖,

which is necessary to understand the risks to the Government‘s budget. The most important source of

risk is usually the rate of economic growth, but it is possible to identify other vulnerabilities of the

revenue and expenditure streams to factors that can decrease revenues and/or increase expenditures,

in comparison to the original budget and other forecasts.

It is also necessary to analyze sources of fiscal risk that are contingent on events/variables, namely,

contingent liabilities and assets (Figure E2). In turn these can be classified as explicit or implicit: the

former refers to Government‘s legal obligations to make a payment (liability) or receive revenues

(asset) only if a particular event occurs. The latter refers to liabilities that arise but on which the

Government is not legally obliged to act, and which are typically excluded from the Government

balance sheet.

A. Criteria for identifying sources of fiscal risk

The criteria for identifying sources of fiscal risk are as follows:

(a) Government assets and liabilities that --

(i) have a potential exposure to shocks (e.g., currency, interest rate, volatility in the price

of commodities, credit defaults), which could impact the MTFF or other medium-term

fiscal forecasts; and

(ii) lack a reasonable or successful10

risk management strategy and/or have difficulties with

its implementation, such that shocks may have a significant impact on fiscal forecasts

such as the MTFF.

For example, these could include a government loan portfolio whose value could be

diminished by credit risk factors (e.g., default by the borrowers), or investments in state-

owned enterprises that go bankrupt.

(b) Contingent liabilities with potential exposure to shocks (e.g., natural disaster that can have an

effect on higher expenditure related to government insurance for agricultural produce,

disaster mitigation expenditure for affected population, etc) with estimated expenditures not

included in the medium-term fiscal forecasts, including MTFF.

The contingent liabilities already included in the fiscal forecasts would not be considered

fiscal risks as they are already taken into account (e.g., government guarantees for

infrastructure) unless, as in the case of legal demands against the Government, there are flaws

in the system for managing its risk (i.e., lack of an adequate information system on legal

demands).

The accounting balance sheet allows an identification of the government direct assets and

liabilities, as well as explicit contingent liabilities; an economic balance sheet includes the

Government‘s tax revenues and expenditures, as well as implicit contingent liabilities of

various types.11

10 The success of the strategy has to be analyzed in terms of whether it is indeed limiting/preventing a fiscal impact arising

from the risks being dealt with and whether it is ―reasonable‖ from a technical point of view — for example, a debt

management strategy that is highly speculative (i.e., based on market views) and that does take into account reducing

medium-term cost within prudent risk limits would not be considered ―reasonable‖. 11

In addition, the Colombian authorities have already estimated expected cost and maximum cost with 95% probability of a

number of contingent liabilities.

85

B. Current sources of fiscal risk for government finances

Legal claims against the state (risk quantification identifies as 18 to 82 percent of GDP

in 2010, according to MTFF);

Oil price shocks (revenues are 13 percent of fiscal revenues annually and rising; requires

updated risk quantification);

Natural disasters (total value exposed is equivalent to US$173 billion, including publicly

owned assets and the private assets of low-income groups). The fiscal risk is calculated

by adjusting the value exposed with the probability of a disaster event. Estimated fiscal

risk equivalent to US$316 million a year; PV is 18 percent of GDP in 2011-50 period.12

Agricultural subsidies (currently being estimated).

There are other implicit contingent liabilities such as financial sector risk, which can be

analyzed and quantified.

III. WORLD BANK ADVISORY SERVICES/PRODUCTS FOR FISCAL RISK

MANAGEMENT

The World Bank is assisting the Colombian Government13

in its design of medium-term fiscal risk

management strategies for the specific sources of fiscal risk mentioned above and for a

comprehensive strategy for the central government, taking into account total fiscal exposure. Working

closely with the Colombian authorities, it will do so by providing the following services and financial

products:

(a) Definition of fiscal risk management objectives;

(b) Identification, together with the Colombian authorities, of potential fiscal risks and mapping

of those same risks, taking into account the accounting and fiscal balance sheet, as well as

Colombia‘s explicit and implicit contingent liabilities;

(c) Identification of methodologies/models for quantifying risk;

(d) Quantification of fiscal risk;

(e) Analysis of the Government‘s capacity to absorb some or all of the risk, that is whether it has

a high degree of fiscal flexibility (e.g., provided by fiscal surpluses, fiscal buffers and

stabilization funds, a low-debt level, a low-risk debt structure, diversified funding sources,

lack of budgetary rigidities, etc.);

(f) Assistance to the Government in its design of risk management strategies, including:

(i) Definition of objectives and time horizon for dealing with potential shocks, followed

by evaluation of different risk-management alternatives, taking into account the

following aspects:

risk avoidance/reduction using policy dimensions;

risk retention/self-insurance, related to the Government‘s macroeconomic

capacity to absorb fiscal risk (e.g., natural hedges, fiscal buffers, contingent

credits, instruments to leverage funding from international financial

institutions, leveraging concessional financing for climate change, etc.);

risk transfer, whereby fiscal risk is transferred to third parties market — using

interest rate swaps, currency swaps into desired currencies, including local

12

Study by ENS, quoted in Fiscal Risk DPL Concept Note. 13 Fiscal risk can be analyzed and managed at the level of the public sector, the central government, sub-national

government and/or different state-owned entities.

86

currency, natural disaster insurance, weather hedges as, for example, rainfall

indexes, financing of low-carbon investments in the market, swaps, options

and/or forwards for oil price risk, loans tied to oil price indexes, etc.

cost-risk trade-off of alternative strategies and instruments;

coordination of proposed alternatives with macroeconomic policy;

constraints of the financial markets, which may limit the strategy choices;

institutional capacity for risk management strategy design and implementation,

including coordination among different government units (e.g., governance,

strategy approval, delegation, accountability, reporting, technical capacity,

etc.).

(ii) Advisory services in the use of financial products for strategy implementation (e.g.,

CAT-Bonds, oil-linked debt) and analyze the different sources which provide these

products;

(iii) Training and institutional capacity building in all these areas, so as to make risk

analysis and management sustainable in the future, be it at a central, state, and sub-

national government level.

The different Bank departments will work together to provide an integrated, comprehensive fiscal

risk-management service to Colombia. A simplified risk management exercise is described in Figure

E3.

Figure E3.

.

87

Annex F: Colombia and South-South Knowledge Exchange (SSKE)

World Bank Institute Brokering Pilot

South-South Cooperation (SSC) is an important national priority for Colombia.

Colombia‘s National Development Plan identifies International Relevance through South-

South Cooperation as a key cross-cutting theme, and the Government has striven to

strengthen the planning, funding, and implementation of South-South Knowledge Exchange

(SSKE), while promoting Colombia as a potential partner for SSKE regionally and globally.

The Government has formulated approaches for South-South learning for the Caribbean and

Mesoamerica, and established funding sources for SSKE, such as its Cooperation and

International Assistance Fund. They are also planning a cooperation strategy with Africa and

the Asia-Pacific region. Colombia‘s Accion Social has begun the important task of

documenting the country‘s rich history of exchanges, which has included sharing knowledge

in social promotion, disaster management, and other diverse sectors. Accion Social has

developed a ―Good Practice‖ guide to catalyze the development of SSKEs and showcase

Colombia as a potential knowledge supplier. Colombia is also active with international

organizations and partners to improve the design and monitoring of SSKEs, with a view to

strengthening the effectiveness of knowledge exchange within the global aid framework.

Colombia’s strong commitment to SSKE, which parallels a growing international focus

on South-South Cooperation, underlies its participation in a Pilot Brokering

Mechanism supporting SSKE coordinated by the World Bank Institute (WBI), which

aims to help countries document their knowledge sharing needs and facilitate matches

for exchanges. In late 2010 WBI launched the Brokering Mechanism in response to

increasing requests from client countries for assistance in systematically documenting

knowledge offers and requests, identifying partners, and implementing follow-up learning

activities. The Pilot is now working with 13 countries, and is expected to focus in 2011 on

identifying a small initial set of supply and demand areas, assisting Country Teams in

engaging governments to document these areas, and brokering matches, mainly through a

community of practice and integration of requests and offers into an online portal. WBI can

also provide assistance on implementing follow-up exchanges, particularly through its

planned launch of an online SSKE Knowledge Hub, which will feature a design toolkit for

exchanges and links to funding sources. Given Colombia‘s strong commitment and evidence

of government interest in working with the World Bank on SSKE, the Country Team has

chosen to participate in this Pilot. Over the course of 2011, the Country Team will work with

Colombian authorities to identify initial supply and demand areas, document these areas

using WBI templates, and provide assistance to identify matches within the evolving

community of practice, which will engage network and country staff throughout the Bank.

Initial dialogue with the Country Team and the Government on the Pilot has identified

several possible areas for engagement. On the supply side, Colombia may be interested in

sharing its expertise in public sector governance, health sector reform, urban mass transport

(Transmilenio), and Conditional Cash Transfer (CCT) programs. The World Bank is

currently engaged in these areas, notably urban transport and social promotion. Colombia

may be interested in being a knowledge recipient in early childhood development, royalty

management and management of economic transitions, such as accession to the Organization

88

for Economic Co-operation and Development (OECD). Colombia has already received

funding for four active exchanges in these and other areas funded by the Knowledge and

Learning Council through a WBI-sponsored South-South Knowledge Exchange Competition.

These exchanges are detailed below:

Achieving Universal Health Care: Colombia together with Chile and Turkey are

sharing knowledge with the Philippines on options and strategies for expanding health

insurance coverage and ensuring high quality healthcare.

Developing the Capacity of the Ecuadorian Ministry of Finance: Ecuador‘s Ministry

is receiving assistance from counterparts in Colombia, Chile, and Peru to develop

capacity in results based budgeting and management of fiscal contingencies.

Measuring Learning Outcomes in Tertiary Education: Colombia is helping the

Moroccan government to build capacity to assess the quality of education in Moroccan

universities and devise strategies for allocating resources.

Enhancing Knowledge on Employment Policies: Colombia along with twelve other

nations mainly in Latin America and Asia are sharing knowledge on ways to design and

implement employment programs in post-crisis settings.

Colombia is a co-chair the Task Team on South-South Cooperation, an international coalition

of countries, multilaterals, donors, academic institutions, and other stakeholders that aims to

develop good practices and policy guidance for South-South learning activities. Launched in

2009, the SSC Task Team has engaged in a global dialogue on South-South Cooperation in

the context of the broader aid effectiveness agenda, including through analytical work, case

study development, and a community of practice. Colombia‘s Director for International

Cooperation in the Ministry of Foreign Affairs co-chairs the SSC Task Team, while technical

leadership of the SSC Task Team resides in the Presidential Program for Social Action and

Accion Social. Both the SSC Task Team and Colombia are expected to play important roles

in the Fourth High-Level Forum on Aid Effectiveness in Busan, Korea in late November

2011.

89

Annex G: Colombia Client Survey 2011

Between February and March, 2011, 402 stakeholders of the World Bank Group in Colombia

were invited to provide their opinions on the Bank‘s assistance to Colombia by participating

in a country survey. Participants in the survey were drawn from among the offices of the

President, Vice President, Ministers, or Parliamentarians; employees of a ministry,

ministerial departments, or implementation agencies; local government officials or staff;

bilateral or multilateral agencies; private sector organizations; NGOs (including CBOs); the

media; independent government institutions; trade unions; faith-based groups; academia or

research institutes; and the judiciary. A total of 147 stakeholders participated in the country

survey (37%). Respondents were asked about the role and performance of the Bank as well

as about general issues facing the country.

Familiarity with the Bank received a mean rating of 7.1 on a 10-point scale (1 being not

familiar and 10 being familiar). This was statistically similar to the FY ‘07 survey, in which

familiarity with the Bank received a mean rating of 6.7 across all respondents. The Country

Survey suggests that overall optimism about Colombia‘s future has increased since FY 07

from 6.4 to 7.3.

Colombia’s development priorities. While the same constellation of development priorities

seems to be of most concern to stakeholders over the years, the research suggests that

education is now of greater concern to respondents, whereas in FY 07, poverty reduction was

considered by a strong plurality of respondents as the top development priority in Colombia.

Aligned with this finding, fifty percent of respondents said that education was the key factor

to reducing poverty (followed closely by employment opportunities). Throughout the

survey, peace and development was identified as an important factor in a number of

challenges by a relatively noticeable percentage of respondents.

The Bank Group’s top priorities. Respondents across all stakeholder groups and both

geographic locations indicated that they thought the Bank‘s top priorities in Colombia were

poverty reduction, economic growth, and infrastructure development. Respondents indicated

that it would be most productive for the Bank to focus most of its resources on access and

quality of education, infrastructure development, increasing employment, and reducing

poverty.

The World Bank’s value. They FY 11 Country Survey in Colombia suggests that while a

significant majority would like to see the Bank more involved in the country, and overall

effectiveness ratings have gone up significantly since FY 07 (6.3 – 7.0) greater emphasis on

its knowledge might be worth greater consideration. For example, ratings of the Bank‘s

technical competence, producing and sharing knowledge and research that are useful, sharing

knowledge about international best practices, and adapting knowledge to the country‘s needs

have all gone down significantly since FY 07. In addition, when asked how the Bank could

be of greater value in Colombia, nearly all the top choices are related to knowledge sharing,

knowledge coordination and knowledge services (in FY 07 there was more emphasis on

financing) . This is a critical aspect of the Bank‘s work in middle income countries.

90

Strengths and weaknesses. While effectiveness ratings in terms of poverty reduction are

still relatively low in Colombia, the Bank‘s ratings increased significantly in this area. Its

ratings also increased in work related to strengthening the environment and natural resource

management (an emerging priority in the country), as well as broader issues such as ‗lending

in a way that promotes effective development‘ and supporting ‗programs and strategies that

are realistic for Colombia.‘

In terms of overall relationships, the Bank is considered highly respectful, and respondents

note that they like to work with the Bank. This is similar to findings in all other Country

Surveys in the region.

91

Annex H: Colombia at a Glance

Colombia at a glance 5/13/11

Latin Upper

Key D evelo pment Indicato rs America middle

Colombia & Carib. income

(2009)

Population, mid-year (millions) 46.3 572 1,002

Surface area (thousand sq. km) 1,142 20,422 48,659

Population growth (%) 1.4 1.1 0.9

Urban population (% of to tal population) 75 79 75

GNI (Atlas method, US$ billions) 229.4 4,003 7,508

GNI per capita (Atlas method, US$) 5,050 6,993 7,495

GNI per capita (PPP, international $) 8,600 10,315 12,466

GDP growth (%) 4.3 -1.8 -2.5

GDP per capita growth (%) 2.9 -2.9 -3.3

(mo st recent est imate, 2003–2009)

Poverty headcount ratio at $1.25 a day (PPP, %) 16 8 ..

Poverty headcount ratio at $2.00 a day (PPP, %) 28 17 ..

Life expectancy at birth (years) 73 73 71

Infant mortality (per 1,000 live births) 16 19 19

Child malnutrition (% of children under 5) 5 4 ..

Adult literacy, male (% of ages 15 and o lder) 93 92 95

Adult literacy, female (% of ages 15 and o lder) 93 90 92

Gross primary enro llment, male (% of age group) 120 118 111

Gross primary enro llment, female (% of age group) 120 114 110

Access to an improved water source (% of population) 92 93 95

Access to improved sanitation facilities (% of population) 74 79 84

N et A id F lo ws 1980 1990 2000 2009 a

(US$ millions)

Net ODA and official aid 90 89 186 972

Top 3 donors (in 2008):

United States -14 -19 105 636

Spain 0 7 13 85

European Commission 0 5 15 57

Aid (% of GNI) 0.3 0.2 0.2 0.4

Aid per capita (US$) 3 3 5 22

Lo ng-T erm Eco no mic T rends 1980 1990 2000 2010

Consumer prices (annual % change) 26.5 29.1 9.2 2.3

GDP implicit deflator (annual % change) 27.6 26.1 34.3 2.8

Exchange rate (annual average, local per US$) 47.3 502.3 2,087.4 1,898.0

Terms of trade index (2000 = 100) .. .. 100 120

1980–90 1990–2000 2000–10

Population, mid-year (millions) 26.9 33.2 39.8 46.3 2.1 1.8 1.5

GDP (US$ millions) 33,401 40,274 100,364 287,400 3.7 2.8 4.5

Agriculture 19.9 16.7 8.9 7.2 2.9 -2.6 2.3

Industry 32.5 37.9 29.5 33.6 5.0 1.5 4.2

M anufacturing 23.9 20.6 15.5 14.2 3.5 -2.5 3.6

Services 47.6 45.4 61.6 58.9 3.1 4.5 4.6

Household final consumption expenditure 70.2 66.4 68.6 66.7 3.0 1.7 4.1

General gov't final consumption expenditure 10.1 9.4 16.7 11.2 4.2 10.5 3.8

Gross capital formation 19.1 18.5 15.0 22.6 1.4 2.0 10.1

Exports o f goods and services 16.2 20.6 16.4 16.5 7.5 5.3 5.7

Imports of goods and services 15.6 14.8 16.7 17.2 0.4 9.0 9.2

Gross savings 19.6 21.6 14.0 19.5

Note: Figures in italics are for years other than those specified. 2009 data are preliminary. .. indicates data are not available.

a. A id data are for 2008.

Development Economics, Development Data Group (DECDG).

(average annual growth %)

(% of GDP)

6 4 2 0 2 4 6

0-4

15-19

30-34

45-49

60-64

75-79

percent of total population

Age distribution, 2009

Male Female

0

10

20

30

40

50

60

1990 1995 2000 2008

Colombia Latin America & the Caribbean

Under-5 mortality rate (per 1,000)

-8

-6

-4

-2

0

2

4

6

8

95 05

GDP GDP per capita

Growth of GDP and GDP per capita (%)

92

Colombia

B alance o f P ayments and T rade 2000 2010

(US$ millions)

Total merchandise exports (fob) 13,158 39,741

Total merchandise imports (cif) 11,786 38,511

Net trade in goods and services 1,411 1,230

Current account balance 770 8,866

as a % of GDP 0.8 -3.1

Workers' remittances and

compensation of employees (receipts) 1,578 4,023

Reserves, including gold 9,006 28,463

P ublic Secto r F inance

(% of GDP)

Total revenue (including grants) 23.8 24.5

Tax revenue 14.4 17.6

Current expenditure 20.6 21.4

T echno lo gy and Infrastructure 2000 2008

Overall surplus/deficit -3.2 -3.1

Paved roads (% of to tal) 14.4 ..

Highest marginal tax rate (%) Fixed line and mobile phone

Individual .. 33 subscribers (per 100 people) 24 110

Corporate 35 33 High technology exports

(% of manufactured exports) 7.7 3.8

External D ebt and R eso urce F lo ws 2010

Enviro nment

(US$ millions)

Total debt outstanding and disbursed 36,219 59,644 Agricultural land (% of land area) 40 38

Total debt service 8,218 9,455 Forest area (% of land area) 54.9 54.6

Debt relief (HIPC, M DRI) – – Terrestrial protected areas (% of surface area) .. 26.2

Total debt (% of GDP) 36.3 20.9 Freshwater resources per capita (cu. meters) 51,403 46,921

Total debt service (% of exports) 45.0 18.7 Freshwater withdrawal (billion cubic meters) 10.7 ..

Foreign direct investment (net inflows) 2,111 2,535 CO2 emissions per capita (mt) 1.5 1.4

Portfo lio equity (net inflows) 1,332 913

GDP per unit o f energy use

(2005 PPP $ per kg of o il equivalent) 9.6 12.1

Energy use per capita (kg of o il equivalent) 673 665

Wo rld B ank Gro up po rtfo lio 2000 2010

(US$ millions)

IBRD

Total debt outstanding and disbursed 1,920 7,504

Disbursements 266 1,279

Principal repayments 242 338

Interest payments 126 266

2000 2009

IDA

Total debt outstanding and disbursed 7 0

Disbursements 0 0

P rivate Secto r D evelo pment 2000 2009 Total debt service 1 1

Time required to start a business (days) – 20 IFC (fiscal year)

Cost to start a business (% of GNI per capita) – 13.1 Total disbursed and outstanding portfo lio 107 838

Time required to register property (days) – 20 o f which IFC own account 84 686

Disbursements for IFC own account 26 152

Ranked as a major constraint to business 2000 2009 Portfo lio sales, prepayments and

(% of managers surveyed who agreed) repayments for IFC own account 20 74

Anticompetitive or informal practices .. 34.5

Crime .. 13.0 M IGA

Gross exposure 97 0

Stock market capitalization (% of GDP) 9.5 57.0 New guarantees 0 0

Bank capital to asset ratio (%) 11.2 12.2

Note: Figures in italics are for years other than those specified. 2009 data are preliminary. 5/13/11

.. indicates data are not available. – indicates observation is not applicable.

Development Economics, Development Data Group (DECDG).

0 25 50 75 100

Control of corruption

Rule of law

Regulatory quality

Political stability

Voice and accountability

Country's percentile rank (0-100)higher values imply better ratings

2009

2000

Governance indicators, 2000 and 2009

Source: Kaufmann-Kraay-Mastruzzi, World Bank

IBRD, 6,570

IDA, 1

IMF, 0

Other multi-lateral, 8,161

Bilateral, 514Private, 32,867

Short-term, 4,110

Composition of total external debt, 2009

US$ millions

93

Millennium Development Goals Colombia

With selected targets to achieve between 1990 and 2015(estimate closest to date shown, +/- 2 years)

Go al 1: halve the rates fo r extreme po verty and malnutrit io n 1990 1995 2000 2008

Poverty headcount ratio at $1.25 a day (PPP, % of population) 8.3 13.5 16.8 16.0

Poverty headcount ratio at national poverty line (% of population) .. 60.0 64.0 45.1

Share of income or consumption to the poorest qunitile (%) 3.4 3.1 2.6 2.3

Prevalence of malnutrition (% of children under 5) .. 6.3 4.9 5.1

Go al 2: ensure that children are able to co mplete primary scho o ling

Primary school enro llment (net, %) 71 83 94 90

Primary completion rate (% of relevant age group) 74 87 95 110

Secondary school enro llment (gross, %) 53 64 72 91

Youth literacy rate (% of people ages 15-24) 95 96 97 97

Go al 3: e liminate gender disparity in educat io n and empo wer wo men

Ratio of girls to boys in primary and secondary education (%) 108 105 104 104

Women employed in the nonagricultural sector (% of nonagricultural employment) 42 45 49 49

Proportion of seats held by women in national parliament (%) 5 12 12 8

Go al 4: reduce under-5 mo rtality by two -thirds

Under-5 mortality rate (per 1,000) 35 31 26 19

Infant mortality rate (per 1,000 live births) 28 26 22 16

M easles immunization (proportion of one-year o lds immunized, %) 82 82 80 95

Go al 5: reduce maternal mo rtality by three-fo urths

M aternal mortality ratio (modeled estimate, per 100,000 live births) 140 120 110 85

B irths attended by skilled health staff (% of to tal) 82 86 86 96

Contraceptive prevalence (% of women ages 15-49) 66 72 77 78

Go al 6: halt and begin to reverse the spread o f H IV/ A ID S and o ther majo r diseases

Prevalence of HIV (% of population ages 15-49) 0.1 0.3 0.5 0.6

Incidence of tuberculosis (per 100,000 people) 54 48 43 36

Tuberculosis case detection rate (%, all forms) 70 57 68 70

Go al 7: halve the pro po rt io n o f peo ple witho ut sustainable access to basic needs

Access to an improved water source (% of population) 88 90 91 92

Access to improved sanitation facilities (% of population) 68 70 72 74

Forest area (% of to tal land area) 55.4 55.2 54.9 54.6

Terrestrial protected areas (% of surface area) .. .. .. 26.2

CO2 emissions (metric tons per capita) 1.7 1.6 1.5 1.4

GDP per unit o f energy use (constant 2005 PPP $ per kg of o il equivalent) 8.2 8.6 9.6 12.1

Go al 8: develo p a glo bal partnership fo r develo pment

Telephone mainlines (per 100 people) 7.3 10.6 18.1 17.9

M obile phone subscribers (per 100 people) 0.0 0.8 5.7 91.9

Internet users (per 100 people) 0.0 0.2 2.2 38.5

Personal computers (per 100 people) 0.9 1.7 3.8 11.2

Note: Figures in italics are for years other than those specified. .. indicates data are not available. 5/13/11

Development Economics, Development Data Group (DECDG).

C o lo mbia

0

25

50

75

100

125

2000 2002 2004 2006 2008

Primary net enrollment ratio

Ratio of girls to boys in primary & secondary education

Education indicators (%)

0

20

40

60

80

100

120

2000 2002 2004 2006 2008

Fixed + mobile subscribers

Internet users

ICT indicators (per 100 people)

0

25

50

75

100

1990 1995 2000 2008

Colombia Latin America & the Caribbean

Measles immunization (% of 1-year olds)

94

Annex I: Selected Indicators of Bank Portfolio Performance and Management

As As of 5/12/2011

Indicators * 2008 2009 2010 2011

Portfolio Assessment

Number of Projects Under Implementation a 22 17 21 22

Average Implementation Period (years) b 3.6 3.2 3.2 3.7

Percent of Problem Projects by Number a, c

9.1 5.9 9.5 9.1

Percent of Problem Projects by Amount a, c

5.9 4.8 4.8 5.4

Percent of Projects at Risk by Number a, d

9.1 11.8 9.5 9.1

Percent of Projects at Risk by Amount a, d

5.9 6.9 4.8 5.4

Disbursement Ratio (%) e 47.6 25.2 59.9 42.5

Portfolio Management

CPPR during the year (yes/no) y y y n

Memorandum Item Since FY 80 Last 5 FYs

Proj Eval by IEG by Number 133 13

Proj Eval by IEG by Amt (US$ millions) 10,513 1,087.5

% of IEG Projects Rated U or HU by Number 23.7 16.7

% of IEG Projects Rated U or HU by Amt 18.2 0.2

* All indicators are for projects active in the Portfolio, with the exception of Disbursement Ratio, which includes

all active projects as well as projects which exited during the fiscal year. a. As shown in the Annual Report on Portfolio Performance (except for current FY). b. Average age of projects in the Bank's country portfolio. c. Percent of projects rated U or HU on development objective (DO) and/or implementation progress (IP). d. As defined under the Portfolio Improvement Program. e. Ratio of disbursements during the year to the undisbursed balance of the Bank's portfolio at the beginning of the year:

Investment projects only.

95

Annex J: Colombia Social Indicators

Latest single year Same region/income group

Latin Lower-

America middle-

1980-85 1990-95 2002-08 & Carib. income

POPULATION

Total population, mid-year (millions) 30.1 36.5 44.5 560.6 3,434.5

Grow th rate (% annual average for period) 2.0 1.9 1.3 1.3 1.1

Urban population (% of population) 65.6 70.5 74.2 78.3 41.6

Total fertility rate (births per woman) 3.4 2.8 2.5 2.4 2.3

POVERTY

(% of population)

National headcount index .. 60.0 46.0 .. ..

Urban headcount index .. 48.0 30.7 .. ..

Rural headcount index .. 79.0 65.2 .. ..

INCOME

GNI per capita (US$) 1,210 2,100 4,670 5,801 1,905

Consumer price index (2000=100) 6 50 158 158 142

Food price index (2000=100) .. .. .. .. ..

INCOME/CONSUMPTION DISTRIBUTION

Gini index .. 57.2 58.9 .. ..

Low est quintile (% of income or consumption) 2.4 3.2 2.9 .. ..

Highest quintile (% of income or consumption) .. 61.2 61.6 .. ..

SOCIAL INDICATORS

Public expenditure

Health (% of GDP) .. .. 6.2 3.4 2.0

Education (% of GNI) .. .. .. 3.5 3.2

Net primary school enrollment rate

(% of age group)

Total .. 68 87 94 90

Male .. 64 87 94 91

Female .. 73 88 94 90

Access to an improved water source

(% of population)

Total .. 90 93 91 88

Urban .. 98 99 97 96

Rural .. 71 77 73 83

Immunization rate

(% of children ages 12-23 months)

Measles 51 95 95 93 82

DPT 61 86 86 92 79

Child malnutrition (% under 5 years) .. 6 5 4 25

Life expectancy at birth

(years)

Total 68 70 73 73 69

Male 64 66 69 70 67

Female 71 74 76 76 71

Mortality

Infant (per 1,000 live births) 32 25 17 22 38

Under 5 (per 1,000) 43 31 20 26 50

Adult (15-59)

Male (per 1,000 population) 237 222 202 196 197

Female (per 1,000 population) 162 127 97 107 125

Maternal (per 100,000 live births) .. .. 130 130 300

Births attended by skilled health staff (%) .. 86 96 89 69

CAS Annex B5. This table w as produced from the CMU LDB system. 04/14/11

Note: 0 or 0.0 means zero or less than half the unit show n. Net enrollment rate: break in series betw een 1997 and 1998 due to

change from ISCED76 to ISCED97. Immunization: refers to children ages 12-23 months w ho received vaccinations before one

year of age or at any time before the survey.

96

Annex K: Key Economic Indicators

Estimate

Indicator 2006 2007 2008 2009 2010 2011 2012 2013 2014

National accounts (as % of GDP)

Gross domestic producta

100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Agriculture 8.1 7.8 7.6 7.4 7.2 7.0 6.9 6.7 6.4

Industry 33.8 33.7 34.6 34.0 33.7 32.8 32.5 32.2 34.4

Services 58.1 58.5 57.8 58.6 59.1 60.2 60.6 61.0 59.2

Total Consumption 80.5 80.2 78.9 79.4 79.9 77.1 76.2 75.7 74.6

Gross domestic fixed investment 22.4 23.0 23.4 22.7 23.2 23.9 24.6 24.8 24.1

Exports (GNFS)b

17.6 16.5 17.9 16.0 15.1 17.5 17.6 18.1 17.9

Imports (GNFS) 20.5 19.8 20.2 18.2 18.2 18.5 18.4 18.6 16.6

Gross domestic savings 19.5 19.8 21.1 20.6 20.1 22.9 23.8 24.3 25.4

Gross national savingsc

20.6 20.2 20.5 20.5 20.1 21.9 22.5 22.9 21.9

Memorandum items

Gross domestic product (US$ billion) 162.8 207.4 244.6 235.8 288.2 313.3 332.1 350.6 369.9

(US$ million at current prices)

GNI per capita (US$, Atlas method) 3440 4060 4640 5050 5510 6060 6710 7040 7290

Real annual growth rates (%, calculated from 00 prices)

Gross domestic product at market prices 6.7 6.9 3.5 1.5 4.3 4.6 4.5 4.5 4.5

Gross Domestic Income 7.8 7.6 5.8 0.2 5.3 8.3 4.7 6.2 7.6

Real annual per capita growth rates (%, calculated from 00 prices)

Gross domestic product at market prices 5.3 5.6 2.3 0.2 3.1 3.4 3.3 3.2 3.3

Total consumption 4.9 5.7 2.2 0.2 3.2 2.8 3.0 3.8 2.9

Private consumption 5.1 5.9 2.2 -0.3 3.1 2.9 4.7 3.8 3.3

Balance of Payments (US$ millions)

Exports (GNFS)b

28558 34213 42671 38237 45240 54924 58065 63145 66720

Merchandise FOB 23930 29381 37095 32563 39546 49909 52814 57223 59456

Imports (GNFS)b

30353 37444 44773 38500 46569 51469 54632 58518 61792

Merchandise FOB 23975 30088 36320 30510 37521 43359 46064 49304 52500

Resource balance -1795 -3231 -2101 -262 -1329 3455 3432 4627 4928

Net current transfers 4743 5216 5512 4614 4391 3987 4273 4594 4940

Current account balance -2988 -6018 -6923 -5141 -8944 -6440 -7064 -6636 -8237

Net private foreign direct investment 5558 8136 8342 4049 256 6540 7431 7116 7841

Long-term loans (net) 1248 2736 1336 1781 5509 1830 -1518 -1220 -1220

Official 869 1723 1238 1617 1053 791 616 416 -73

Private 379 1013 97 164 4455 1039 -2134 -1636 -1147

Other capital (net, incl. errors & ommissions) -3841 -9552 -5378 -2036 43 -3915 -767 -1225 -394

Change in reservesd

23 4698 2623 1347 3136 1985 1918 1965 2010

Memorandum items

Resource balance (% of GDP) -1.1 -1.6 -0.9 -0.1 -0.5 1.1 1.0 1.3 1.3

Current account balance (% of GDP) -1.8 -2.9 -2.8 -2.2 -3.1 -2.1 -2.1 -1.9 -2.2

Real annual growth rates ( YR00 prices)

Merchandise exports (FOB) 8.6% 6.9% 4.5% -2.2% 2.2% 3.1% 8.1% 9.9% 7.1%

Merchandise imports (CIF) 20.0% 14.0% 10.5% -7.3% 14.7% 7.3% 6.6% 13.7% 7.0%

(Continued)

Projected

97

Annex K: Key Economic Indicators (continued)

Estimate

Indicator 2006 2007 2008 2009 2010 2011 2012 2013 2014

Public finance (as % of GDP at market prices)e

Total revenues 27.3 27.2 26.3 26.5 24.5 25.2 25.9 25.9 25.7

Total expenditures 28.1 28.2 26.3 29.1 27.3 28.8 28.5 27.7 27.3

Statistical discrepancies -0.2 0.2 -0.3 -0.2 -0.3 0.0 0.0 0.0 0.0

Current account surplus (+) or deficit (-) -1.0 -0.8 -0.3 -2.8 -3.1 -3.5 -2.5 -1.7 -1.5

Capital expenditure 5.5 6.4 5.0 6.2 5.9 6.5 6.9 6.9 6.7

Monetary indicators

M2/GDP 22.7 22.6 22.0 22.0 21.7 20.9 21.0 21.0 22.2

Growth of M2 (%) 20.2 11.9 8.5 5.9 4.3 6.8 8.1 7.5 6.9

Price indices( YR00 =100)

Merchandise export price index 108.8 107.1 123.8 120.0 117.5 146.1 145.9 146.8 148.4

Merchandise import price index 102.8 97.6 100.8 103.3 95.7 100.3 100.4 96.1 87.6

Merchandise terms of trade index 105.8 109.8 122.8 116.2 122.7 145.6 145.2 152.7 169.4

Consumer price index (% change) 4.3 5.5 7.0 4.2 2.3 3.3 2.9 3.0 2.9

GDP deflator (% change) 5.8 5.0 7.8 4.2 2.4 6.9 2.9 2.7 2.3

a. GDP at factor cost

b. "GNFS" denotes "goods and nonfactor services."

c. Includes net unrequited transfers excluding official capital grants.

d. Includes use of IMF resources.

e. Consolidated central government.

f. "LCU" denotes "local currency units." An increase in US$/LCU denotes appreciation.

Projected

98

Annex L: Key Exposure Indicators

Estimated

Indicator 2006 2007 2008 2009 2010 2011 2012 2013 2014

Total debt outstanding and 40702 44593 46483 53535 64670 63180 66355 68931 71576

disbursed (TDO) (US$m)a

Net disbursements (US$m)a

1174 3220 2342 7260.7 5357.4 4582.4 2273.1 3994.4 3258.17

Total debt service (TDS) 10520 8451 8210 8754 9455 8479 11175 9562 12413

(US$m)a

Debt and debt service indicators

(%)

TDO/XGSb

119.8 109.9 94.4 122.6 127.7 102.8 101.6 98.3 96.5

TDO/GDP 25.0 21.5 19.0 22.7 22.6 20.2 19.9 19.5 19.2

TDS/XGS 31.0 20.8 16.7 20.0 18.7 13.8 17.1 13.6 16.7

Concessional/TDO 2.5 2.1 2.1 4.0 3.9 4.0 3.8 3.7 3.6

IBRD exposure indicators (%)

IBRD DS/public DS 8.5 14.1 9.3 12.0 14.7 11.8 10.6 12.8 13.2

Preferred creditor DS/public 28.0 38.9 32.2 36.6 29.6 34.5 29.9 30.2 27.1

DS (%)c

IBRD DS/XGS 1.4 1.7 0.8 1.0 1.2 0.8 0.8 0.9 1.2

IBRD TDO (US$m)d

4563 4756 5438 6570 7503 7842 8118 8242 8190

Of which present value of

guarantees (US$m)

Share of IBRD portfolio (%) 4 4 5 6 7 8 8 8 7

IDA TDO (US$m)d

3 2 2 1 0 0 0 0 0

a. Includes public and publicly guaranteed debt, private nonguaranteed, use of IMF credits and net short-

term capital.

b. "XGS" denotes exports of goods and services, including workers' remittances.

c. Preferred creditors are defined as IBRD, IDA, the regional multilateral development banks, the IMF, and the

Bank for International Settlements.

d. Includes present value of guarantees.

e. Includes equity and quasi-equity types of both loan and equity instruments.

Projected

99

Annex M: Operations Portfolio (IBRD/IDA and Grants)

IBRD/IDA

Total Disbursed (Active) 1,294.00

of w hich has been repaid 34.12

Total Disbursed (Closed) 6,175.92

of w hich has been repaid 2,260.08

Total Disbursed (Active + Closed) 7,469.92

of w hich has been repaid 2,294.20

Total Undisbursed (Active) 741.38

Active Projects

Project ID Project NameDevelopment

Objectives

Implementation

ProgressFiscal Year IBRD IDA GRANT Cancel. Undisb. Orig. Frm Rev'd

P074726 Bogota Urban Services Project S HS 2003 130 26.6 -3.42 26.5

P051306 Peace and Development I S MS 2004 37.8 0.12 3.6 -3.03 -3

P082466 Integrated Mass Transit Systems HS S 2004 757 0.24 2.4 -504.35

P082167 Agricultural Transition Project MS MS 2005 30 0.3 0.27

P082429 Disaster Vulnerability Reduction S S 2005 260 150 22.5 158.97 21.36

P083075 GEF Integrated National Adaptation S S 2006 5.4 0.1 0.1265

P091932 GEF National Protected Areas S S 2006 15 4.3 3.86

P082520 Sustainable Development Inv S S 2006 7 0.3 0.29

P085727 Disaster Vulnerability Reduct. II HS MS 2006 80 2.44 39.6 42 42.05

P096965 La Guajira Water and Sanit. MU MU 2007 90 80.0 80

P082908 Rural Education APL II MS MS 2008 40 31.0 20.78

P052608 Antioquia Secondary Education S S 2008 20 13.9 11.1

P105164 Second Student Loan Support S S 2008 300 126.9 126.9 51.98

P104567 Second Rural Productive Partnerships MS MS 2008 30 12.2 -1.99

P099139 Strength. Public Info, M&E for Res. Mgmt. S S 2009 8.5 5.0 2.11

P083904 Justice Services Strenghtening MS MS 2010 20 19.0 3.45

P106628 Consolidation of Nat. Publ Mgmt Inf. MS MS 2010 25 14.5 -0.8255

P104687 GEF Mainstreaming Sust. Cattle Ranching S MS 2010 7 6.3

P101279 Solid Waste Management Program MU MU 2010 20 18.0 5.66

P117590 Science Technology & Innovation S S 2011 25 25.0

P111479 Rio Bogota Environ Infrastructure S S 2011 250 250.0

P110671 National Macroproyectos Social Interest S S 2011 40 40.0

Overall Result 2170.3 27.4 153 741.4 -88.7 86.28

Original Amount in US$ Millions Disbursements

Difference Between

Expected and Actual

Supervision Rating

Last PSR

100

Annex N: Trust Funds Overview

Program Fund Trust Fund Name

Grant

Amount

US (000)

Grant

Closing

date

IDF TF058311 Strenghening of the Legal Claims System 479 9/27/2010

PSIA TF097240 Colombian Labor Markets: Reforming the Cajas de Compensación Familiar (CCFs) 25 12/31/2010

PHRD TF056577 San Nicolas Carbon Sink 498 4/5/2011

DFSG TF096995 Contribution to shared growth of existing instruments to promote public support for commercial innovation 60 4/30/2011

SFLAC TF096162 Advisory Services for the Formulation of Integrated Public Transport Regulatory Frameworks 390 5/31/2011

GFDRR TF096323 Barranquilla- Preparation for integrated urban flood prevention investment project 150 6/22/2011

AHI TF098473 Avian Flu Prevention and Early Response Project 890 6/30/2011

GENTF TF095198 Gender and IDPs: Integrating Gender into Peace and Development 100 6/30/2011

GFDRR TF096324 CAPRA 500 6/30/2011

WPP TF096847 Training Program for Water Resources Management Modeling in Colombia 53 6/30/2011

JSDF TF057249 Innovative Arts-Based Education for Displaced People in Cartagena 1085 6/30/2011

PPAIF TF074726 Metro Study, Integration Public Transit Syst., SNTA (3 cities), and Comm. Campaign BRT 75 6/30/2011

GFDRR TF091242 Risk Modeling for Hazard and Risk Management - Experience of Bogota: Apllication Reference Book 100 6/30/2011

IFC TF093390 Trade Logistics Advisory Program 210 6/30/2011

FS-CO TF094084 Conservation Incentives for Land Management 6425 10/18/2011

GEFIA TF056351 National Protected Areas 15000 10/18/2011

SFLAC TF096015 Preparation for Barranquilla Flood Management Project 725 11/1/2011

SFLAC TF096784 Supervision Funds for the Preparation of the Barranquilla Management Flood Project 36 11/1/2011

GEFIA TF056350 National Adaptation to Climate Change 5400 12/31/2011

SFLAC TF098916 Colombia Low-Carbon Study 400 12/31/2011

PSIA TF098305 National Job Formation System 25 12/31/2011

IDF TF092702 Strengthening of the Procurement System 365 1/15/2012

PPIAF TF099124 PPIAF-Support to Concession Agency (INCO) 249 2/28/2012

FLIT TF097524 Financial Capabilities and Education Measurement Project 200 2/28/2012

PHRD TF093087 Jepirachi Wind Farm Offset 675 3/30/2012

GPF TF096676 W2-Citizen s Visible Audits to Improve Public Investment Transparency and Accountability 700 3/30/2012

NTF TF096627 Strengthening Human Rights and Rights to Basic Social Services in Peace and Development Zones 400 3/31/2012

JSDF TF091174 Institutional and Community Strengthening for Local Governance 1588 6/24/2012

CITIES TF098963 Cities Alliance - Macroproyectos de Interes Social Nacional 215 6/29/2012

GFDRR TF098966 Disaster Risk Management Analysis (CCDRMA) 100 6/29/2012

FCPFR TF097224 FCPF Readiness Grant 200 6/30/2012

NTF TF096788 Implementing the Right to Health through Universal Health Insurance in Colombia 400 6/30/2012

IFC TF093766 Strengthening Social Accountability to Improve Impact of Royalties in Colombia 250 6/30/2012

GFDRR TF096953 Pilot Impact Evaluation Pereira BRTs 20 6/30/2012

JSDF TF091176 Peaceful Dispute Resolution Services for the Poor 1900 9/4/2012

SPBF TF094596 Protection of Land and Patrimony of Internally Displaced Persons - Phase III 5000 10/29/2012

SFLAC TF097840 Institutional Strengthening and Capacity Building to Support the Rio Bogota Environmental 200 12/28/2012

CF TF053534 Rio Amoya Enviromental Services 9400 12/30/2012

IFC TF095026 Extractive Industries Royalty Management 230 12/31/2012

JSDF TF093829 Empowering Young Women Affected by Violence in Colombia 1483 6/11/2013

SFLAC TF097348 Environmental System and Enhancing Sustainability in Water Resources and Air Quality Management 750 7/15/2013

JSDF TF099171 Soccer Together: Rethinking how to Improve Gender Equity and Inclusion in the Education System 1900 3/31/2014

JSDF TF093141 Access to Opportunities for Young People in Colombia 1734 7/28/2014

GEFIA TF096465 Mainstreaming Sustainable Cattle Ranching Project 7000 9/23/2015

CF TF054033 Rio Frio Waste Management 100 12/31/2016

CF TF090526 San Nicolas Carbon Sink and Arboreal Species Recovery 486 12/31/2018

68,171

101

Annex O: IFC Committed and Disbursed Outstanding Investment Portfolio

Cor

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PicoPicoCristóbal ColónCristóbal Colón(5,775 m)(5,775 m)

C A Q U E T ÁC A Q U E T Á VA U P É SVA U P É S

G U AV I A R EG U AV I A R E

M E T AM E T A

H U L AH U L AC A U C AC A U C A

C H O C ÓC H O C Ó

A N T I O Q U I AA N T I O Q U I A

VALLE DELVALLE DELCAUCACAUCA

RISARALDÁRISARALDÁ

QUINDIOQUINDIO

C U N D I N A -C U N D I N A -M A R C AM A R C A

DISTRITODISTRITOCAPITALCAPITAL

G U A I N Í AG U A I N Í A

V I C H A D AV I C H A D A

C A S A N A R EC A S A N A R E

C E S A RC E S A R

NORTE DENORTE DESANTANDERSANTANDER

A R A U C AA R A U C A

A M A Z O N A SA M A Z O N A S

N A R I Ñ ON A R I Ñ O

P U T U MAYO

CALD A S

CÓRDOBA

BOL Í

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SUC

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S A N TA N D E R

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La PedreraLa Pedrera

PuertoPuertoSantanderSantander

PuertoPuertoPizarroPizarro

PuertoPuertoLeguízamoLeguízamo

PuertoPuertoHuitotoHuitoto

MacujerMacujer

CalamarCalamar

MapiripanaMapiripana

Santa RitaSanta Rita

PuertoPuertoNuevaNueva

ChavivaChaviva

San JuanSan Juande Aramade Arama

GarzonGarzonGuapíGuapí

IpialesIpiales

GaviotasGaviotasSan PedroSan Pedro

MirafloresMiraflores

San VicenteSan Vicentedel Caguándel Caguán

GiradotGiradot

PalmiraPalmira

BugaBuga

CartagoCartago

ChiquinquiráChiquinquirá

SocorroSocorro

TurboTurbo

YarumalYarumal

QuibdoQuibdo

PuertoPuertoAsisAsis

El EncantoEl Encanto

Locas deLocas deCahuinariCahuinari

LéridaLérida

YavarateYavarate

TabaquénTabaquén

BrujasBrujas

San RafaelSan Rafael

El BaneoEl Baneo

OcañaOcaña

MaganquéMaganqué

LeticiaLeticia

MituMitu

PuertoPuertoInirídaInirída

PuertoPuertoCarreñoCarreño

FlorenciaFlorencia

NeivaNeiva

PopayanPopayan

CaliCali

PastoPasto

San JoséSan Josédel Guaviaredel Guaviare

VillavincencioVillavincencio

MocoaMocoa

ArmeniaArmeniaPereiraPereira

TunjaTunjaYopalYopalManizalesManizales

BucaramangaBucaramanga

MonteriaMonteria

SincelejoSincelejo

ValleduparValledupar

CúcutaCúcuta

MedellinMedellin

IbaqueIbaque

BOGOTÁBOGOTÁ

MA

GD

ALE

NA

LA G

UAJ I RA

AraucaArauca

La Pedrera

PuertoSantander

PuertoPizarro

PuertoLeguízamo

PuertoHuitoto

Macujer

Calamar

Mapiripana

Santa Rita

PuertoNueva

Chaviva

San Juande Arama

GarzonGuapí

Tumaco

Ipiales

GaviotasSan Pedro

Miraflores

San Vicentedel Caguán

Giradot

Palmira

BugaBuenaventura

Cartago

Chiquinquirá

Socorro

Turbo

Acandí

Yarumal

Quibdo

PuertoAsis

El Encanto

Locas deCahuinari

Lérida

Yavarate

Tabaquén

Brujas

San Rafael

El Baneo

Ocaña

Maganqué

Puerto Bolívar

Leticia

Mitu

PuertoInirída

PuertoCarreño

Arauca

Florencia

Neiva

Popayan

Cali

Pasto

San Josédel Guaviare

Villavincencio

Mocoa

ArmeniaPereira

TunjaYopalManizales

Bucaramanga

Monteria

Sincelejo

Cartegena

BarranquillaSanta Marta

Valledupar

Cúcuta

Ríohacha

Medellin

Ibaque

BOGOTÁ

C A Q U E T Á VA U P É S

G U AV I A R E

M E T A

H U L AC A U C A

C H O C Ó

A N T I O Q U I A

VALLE DELCAUCA

RISARALDÁ

QUINDIO

C U N D I N A -M A R C A

DISTRITOCAPITAL

G U A I N Í A

V I C H A D A

C A S A N A R E

C E S A R

NORTE DESANTANDER

AT L Á N T I C O

A R A U C A

A M A Z O N A S

N A R I Ñ O

P U T U MAYO

CALD A S

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BOL Í

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Atrato

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Casanare

Atacavi

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Vaupés

Caquetá

Caguán

Magdalena

Caribbean Sea

Lago deMaracaibo

PACIFICOCEAN

To Maracaibo

To Mérida

To Guasdualito

To Ibarra

Cor

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PicoCristóbal Colón(5,775 m)

75°W 70°W

75°W 70°W

5°N

10°N

0°N

5°N

0°N

COLOMBIA

0 80 160 240

0 1208040 160 200 Miles

320 Kilometers

IBRD 33388R

FEBRUARY 2009

COLOMBIASELECTED CITIES AND TOWNS

DEPARTMENT CAPITALS

NATIONAL CAPITAL

RIVERS

MAIN ROADS

RAILROADS

DEPARTMENT BOUNDARIES

INTERNATIONAL BOUNDARIES

This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, o r any endo r s emen t o r a c c e p t a n c e o f s u c h boundaries.