Foreign Direct Investment Jumps 44.5% in Colombia During First Quarter due to Isagen Sale

Foreign direct investment (FDI) into Colombia in the first quarter of 2016 spike by 44.5% compared to the previous year, according to new figures released by the country’s central bank. Overall, more than $4.57 billion USD poured in to economy from January through March, making this the nation’s best quarter for FDI since the second quarter of 2014.

This jump doesn’t necessarily equate to a new sustainable trend for investment into Colombia, however. As Bancolombia noted, the majority of the influx is due to the sale of state-owned electric utility Isagen, which the President Juan Manual Santos government put up for purchase amid sagging state revenue.

Without that the sale of Isagen, which Canada’s Brookfield Renewable Energy Partners bought in January for $2 billion USD, the first quarter FDI numbers would have been below the amount seen in the first quarter of 2015. “Excluding the inflow coming from the sale of Isagen, FDI would have contracted 18.7% year-over-year,” wrote Bancolombia in a note for investors.

In line with these results, Bancolombia expects foreign direct investment to fall over the rest of 2016 compared to last year. It expects the annual tally to come in at just $10.5 billion USD, well below the $12.1 billion USD recorded in 2015, according to the bank — and a vast drop from the roughly $16 billion USD reported by the central bank in both 2014 and 2013.

The sale of Isagen, particularly because it was purchased by a foreign firm, was highly controversial in Colombia. While the Santos administration had been posturing for at least a year to put its 57.6% stake in the utility up for auction, various legislators and labor unions spent 2015 trying to block the move. But the nation’s top judicial authority ruled in September 2015 that the government could proceed with the sale. Outcry from opponents followed the purchase, and some citizens voiced their disapproval in a January protest march in Medellín.