January 22, 2013 / 5:31 PM / 5 years ago

UPDATE 2-Colombia's Santos wants central bank to cut interest rate

* Central bank board due to meet on Monday to decide on rate

* Lower borrowing costs would foster growth, says Santos

By Nelson Bocanegra and Jack Kimball

BOGOTA, Jan 22 (Reuters) - Colombian President Juan Manuel Santos said on Tuesday that the government, which is represented by the finance minister on the central bank’s seven-member board, will ask the monetary authority to lower the benchmark interest rate next week.

Colombian policymakers have cut the overnight lending rate at the last two meetings to combat a slowdown in the economy due to weaker overseas sales and manufacturing, and experts widely expect another slash at the bank’s Jan. 28 meeting.

“I believe the central bank can continue reducing interest rates,” Santos told a meeting of the textile industry in Medellin, Colombia’s second-largest city.

“They should meet next week for the first board meeting of this year and we’re going ask the board to continue lowering interest (rates) to be able to also give additional stimulus to the economy,” he said.

In a Reuters survey released on Tuesday, analysts nearly unanimously saw the bank cutting the rate by 25 basis points to 4 percent on Monday, following quarter-point cuts each in November and December.

The government lowered its growth forecast for 2012 to around 4 percent from 4.8 percent previously following weaker-than-expected third-quarter data.

Santos also said the government would introduce an import tariff on textiles and shoes of $4 per kilogram.

“We’ve seen a recent increase in imports from some specific countries, at such a (low) price that it defies reason,” said Santos, adding that the government suspects that money laundering gangs may be behind these imports.

The 61-year-old economist said that the tariffs applied to formal importers would be lowered to 10 percent from 15 percent, so that the new per-kilogram levy would not affect them.

The measure is aimed at helping local manufacturing that has shown signs of weakness over the last few months and has been hit by the strong peso which makes Colombian imports cheaper but its exports more expensive.

Industrial production fell in six of the 11 months with reported data last year, worrying policymakers.

Colombia’s peso currency rose around 9 percent in 2012, making it one of the world’s strongest gaining monies, and the trend has continued with it firming 1.2 percent so far in 2013.

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