UPDATE 1-Colombia ups 2011 economic growth goal to 4.5 pct

* Central government deficit seen 4.1 pct next year

* Government to borrow more in local TES bond market
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By Javier Mozzo

BOGOTA, Sept 6 (BestGrowthStock) – Colombia has increased its 2011
economic growth goal to 4.5 percent from a previous 4 percent,
Finance Minister Juan Carlos Echeverry said on Monday,
predicting the expansion could reach as high as 5.5 percent.

“We have budgeted 4.5 percent but our projections go as
high as 5.5 percent,” he told reporters.

The central government deficit is expected to be 4.1
percent of gross domestic product in 2011, up from a previously
projected 3.9 percent.

President Juan Manuel Santos, sworn in for a four-year term
last month, has ordered an increase in infrastructure projects
aimed at supporting Colombia’s agriculture sector. The
government is also increasing investment in housing, mining and
technology.

Santos and Echeverry say the spending is needed to drive
growth and eventually end the Andean country’s budget
deficits.

Colombia will increase its auctions of local TES debt next
year by about $1.1 billion over its original 2011 target to
accommodate a planned increase in government spending,
Echeverry said.

Colombia originally planned $8.85 billion in TES auctions
for next year.

Earlier on Monday there were leaks in the market of
higher-than-expected government indebtedness next year, driving
local bond prices down. Yields on benchmark TES bonds due July
2020 (TFIT15240720: ) rose after the news to 7.174 percent
compared with Friday’s close of 7.068 percent.

“It was a combined effect,” said Banco de Bogota Chief
Economist Camilo Perez. “Inflation came out higher than
expected and, additionally, there is the announcement of the
additional indebtedness in 2011.”

The government said on Saturday that inflation in August
was 0.11 percent. The market had expected a rate of 0.04
percent.

Colombia will unfreeze 482,700 billion pesos in spending in
2010, but the move will not increase the country’s expected
central government deficit of 4.3 percent of GDP this year,
Echeverry said.
(Reporting by Javier Mozzo; Editing by Kenneth Barry)

UPDATE 1-Colombia ups 2011 economic growth goal to 4.5 pct