September 15, 2014 / 7:39 PM / in 3 years

Exclusive: Colombia may pre-finance 2015 borrowing needs - finance minister

Colombia's Finance Minister Mauricio Cardenas gestures during an interview with Reuters in Bogota March 10, 2014.John Vizcaino

NEW YORK (Reuters) - Colombian Finance Minister Mauricio Cardenas said on Monday the government could start early to pre-finance some of its estimated $3 billion in 2015 borrowing needs by tapping international capital markets before year-end.

"We are now thinking for next year. We may pre-finance some of the needs for 2015, but that depends on the markets, that depends on the assessment whether it is better to come to the markets with a bond issue this year or next year," Cardenas said in an interview with Reuters.

"And it is also a question that has a lot to do with what we expect the (U.S. Federal Reserve) to do with interest rates here in the United States," Cardenas said, referring to the international component of the nation's debt stock.

Cardenas, in New York for a meeting with investors, said the nation's currency, the peso , has weakened against the U.S. dollar to levels Colombia considers consistent with "macroeconomic equilibrium."

The peso currently trades around 1,987 pesos to the U.S. dollar, having weakened from 1,837.5 pesos in early July as a combination of central bank dollar buying to boost the coffers of exporters, weakening oil output and lower crude prices softened demand for the currency.

"It is a rate that gives us a lot of comfort. If the peso weakens a bit more, we would not mind. I think that would be healthy also for the economy," Cardenas said.

Last week, President Juan Manuel Santos said he expected the peso to settle in a range of 2,000 to 2,100 per U.S. dollar.

Cardenas, who sits on the central bank's monetary policy board, said he believes the current benchmark interest rate of 4.5 percent could be considered at a "neutral" level. This meets the nation's mid-point inflation target of 3 percent and at the same time help the economy achieve its forecast growth rate of 4.7 percent for the year.

Credit Suisse economists wrote clients last week that they view leaving the central bank's policy rate at 4.5 percent as an expansionary tactic to counter risks to growth from lower oil revenue.

However, the bank said it believes positive factors such as low unemployment and strong domestic demand outweigh the downside risks for the remainder of this year and in 2015.

Cardenas said energy company Ecopetrol ECO.CN, majority owned by the government, spent nearly $10 billion on oil exploration this year.

"We have to keep the momentum in oil production," he said.

The government reports second-quarter GDP on Tuesday.

Cardenas said the renewal of the two main taxes, the financial transactions tax and the wealth tax, closes a fiscal gap of about 12.5 trillion pesos in the 2015 budget.

"Well, I'm not relaxed because we will need to have the financial transactions tax remain at the same rate as there is today, which is a 0.4 percent tax. But in the case of the wealth tax, we'll need to raise the rates, and that of course is what creates some discomfort," he said.

He left much of the questions related to Santos' upcoming austerity plan, due for unveiling this week, to the president.

"Some elements have to do with freezing the payroll," he said, adding that the government plans to cut general expenses, citing mobile phone costs, travel and paper.

Reporting by Daniel Bases; Editing by James Dalgleish nand Steve Orlofsky

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