The enhanced liquidity of the economy lowered interest rates by ten points to 24.4 percent and 34.3 percent, respectively, by year end. The gap between domestic and external interest rates was bridged in 1997. Assuming an unchanged level of devaluation, yield from external deposits is ten points higher than from domestic placements. The level of unemployment is a major socio-economic problem, with poor economic performance reflected in a rise in unemployment from 11.3 percent in December 1996 to 12 percent one year later. This was due more to a larger potential workforce than to a reduction in new work opportunities.
Fiscal policy is another problem affecting the Colombian economy.
The public finances should improve in 1998 as the electricity sector and other decentralised bodies are expected to perform better. The general outlook for 1998 is therefore relatively optimistic as the country may be entering a more substantial expansionary phase. Realization of macroeconomic targets requires action within reasonable parameters rather than drastic measures. The most difficult task will be for the central government to control its expenditure and balance its books. Also, economic policy decisions will need to be coordinated among the authorities, taking care to provide public opinion with transparent management .