Loan Signed, Trade Surplus Seen : Colombia’s Economic Prospects Improving

Bright economic prospects have brought Colombia some good news following the shocks in November of a guerrilla siege and a devastating volcanic eruption.

With the country on the brink of its first trade surplus in years and with fresh funds under its belt to tide it through the next 12 months, “1986 will undoubtedly be a good year for Colombia on the economic front,” a European ambassador said.

The recent signing in New York of a $1-billion loan with international banks is expected to secure Colombia’s 1986 financial needs, officially put at around $2.5 billion.

At the same time, coffee exports--the traditional source of the country’s foreign earnings--are on the rise, following news of a severe drought in Brazil’s key coffee-growing areas. This should add $1 billion to Colombia’s export revenues next year.

Best Credit Risk

“After some months of misgivings, private bankers and international financial organizations again consider Colombia as the best credit risk in Latin America,” a European banker said.

Following November’s siege of the guerrilla-held Palace of Justice in Bogota and the eruption of the Nevado del Ruiz volcano that killed 23,000 people, the economic upturn could not have come at a better time, diplomats said.

Although Colombia owes a total of $14 billion, it is the only Latin American debtor country not to have sought rescheduling. The latest loan was the biggest for the region since the international debt crisis began in 1982.

“We have fulfilled our commitment to save Colombia’s economy,” President Belisario Betancur told the closing session of Congress in December, pledging to hand a sound economy to his successor when his four-year mandate expires next August.

International currency reserves continue to rise and are expected to reach $2 billion by the end of the year.

Exports, especially of secondary goods such as bananas, nickel and flowers, have been so strong that the government expects a $100-million trade surplus--the country’s first this decade.

That surplus, after last year’s deficit of $312 million, is expected to expand between $800 million and $1 billion in 1986, helped not only by coffee sales but also renewed oil exports and increased coal shipments.

Recovered Self-Sufficiency

Colombia has just recovered self-sufficiency in oil after a 10-year interruption. Initial exports, scheduled to start in January, are expected to reach 30,000 barrels a day later this year. A 150,000 barrel-a-day target has been set for the end of the year.

Coal exports, which began last February from the giant El Cerrejon mine, are expected to bring in three times the $120 million they earned this year.

Coffee exports, traditionally accounting for about half of Colombia’s foreign revenue and valued at $1.5 billion in the country’s latest fiscal year, could earn $2.5 billion in the current year, according to Coffee Exporters’ Assn. President Gilberto Arango.

But the expected windfall could harm Colombia’s plans to reconstruct areas affected by the avalanches of mud triggered by the Nov. 13 volcanic eruption, diplomats said.

“With the coffee bonanza now in sight, foreign governments are going to think twice about sending more financial aid,” one diplomat said.

The Colombian government put a figure of $112 million on the cost of economic and social rebuilding of the disaster area, where the lives of 320,000 people have been affected.