Second Fiscal Sustainability, Competitiveness, and Migration DPF

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The development objective of the Second Fiscal Sustainability, Competitiveness, and Migration Development Policy Financing Program for Colombia of the operation are to: (i) support fiscal sustainability measures and improved contingent liabilities management; (ii) foster productivity and growth in non-extractive sectors by strengthening the policy framework for trade facilitation, business regulation, innovation and green growth; and (iii) support regularization and integration of migrants. The proposed Development Policy Financing (DPF) is the second in a series of two DPFs that support Colombia’s efforts to maintain fiscal sustainability, further strengthen the foundations for productivity growth and support regularization and integration of refugees and migrants in a complex external environment. The post-conflict context and the unprecedented surge in migration from Venezuela give these reforms even greater urgency.Migration of this scale generates both significant short-term challenges and medium term opportunities to contribute to growth. It also involves coordination with neighboring countries, as receiving countries provide public good services to the entire region. Fiscal sustainability remains a central priority for the government in the context of additional spending needs related to the implementation of the peace agreement and migration-related expenditure. Reducing the vulnerability to terms of trade fluctuations requires further reforms to enable diversification and productivity growth in non-extractive sectors. The operation contributes to the peace and post-conflict agenda and is well-aligned with the objectives of the World Bank Group’s Colombia Country Partnership Framework (CPF) FY2016-2021.A new National Development Plan (NDP) “Pacto por Colombia – Pacto por la Equidad” covering the period 2018-2022 is currently under discussion in Congress. The new NDP builds on the previous NDP that covered the period 2014–2018. It recognizes the importance of complementing growth with social inclusion to promote shared prosperity. Moreover, the new NDP places its three pillars within a consistent macroeconomic framework, anchored around fiscal responsibility. The new NDP recognizes that productivity and entrepreneurship contribute to poverty reduction and inclusive growth. With its reforms to integrate and include migrants, including refugees, Colombia is proving a regional leader in the proactive management of the Venezuela migration crisis. The Fiscal Sustainability, Competitiveness, and Migration DPF series aims to support Colombia’s efforts to maintain fiscal sustainability measures and improved contingent liabilities management, foster productivity and growth in non-extractive sectors by strengthening the policy framework for trade facilitation, business regulation, innovation and green growth and support regularization and integration of migrants, in the context of the ongoing peace process and under a less favorable external environment.