Academic literature on the topic 'Fixed-term'

A new tool for the solution of nonlinear differential equations is presented. The Fixed-Term Homotopy (FTH) delivers a high precision representation of the nonlinear differential equation using only a few linear algebraic terms. In addition to this tool, a procedure based on Laplace-Padé to deal with the truncate power series resulting from the FTH method is also proposed. In order to assess the benefits of this proposal, two nonlinear problems are solved and compared against other semianalytic methods. The obtained results show that FTH is a power tool capable of generating highly accurate solutions compared with other methods of literature.

In terms of the common law contract of employment an employee who is a party to a fixed term contract, unlike an indefinite period contract, cannot be dismissed. The contract terminates upon an agreed or ascertainable date determined by the parties and the conclusion of the contract. Section 186(1)(b) of the Labour Relations Act 1995, however, defines the failure to renew a fixed term contract on the same or similar terms where the employee reasonably expected the contract to be renewed, as a dismissal. In this treatise the scope and content of this provision is considered with reference to relevant case law. The factors and considerations that establish a reasonable expectation are highlighted and considered. The question as to whether or not this provision also provides for the situation where an employee expects indefinite employment is also considered and critically discussed. The author concludes that the provision should not be interpreted in such a manner that an expectation of permanent employment is created.

During the 1980's, many European countries introduced flexibility measures in their labour market to fight high and persistent levels of unemployment. In particular, in many countries reforms consisted of the introduction of more flexible labour contracts (fixed-term contracts) in comparison to the predominant ones (permanent contracts). The purpose of this thesis is to analyse the effects of such contracts on the overall performance of the labour market. First, an economy with firing costs is analysed theoretically. Firing costs are generally considered one of the most important elements in making a labour market rigid. This chapter stresses the fact that it is not just the level of severance payments what matters, but a wider view of employment protection. In particular, dismissal conflicts are modeled explicitly and their cost is derived. In the second chapter, the effects on employment of introducing fixed-term contracts in an economy with only permanent contracts are analysed theoretically. Our findings are that higher employment at the expense of segmentation of the labour market only arises if wages are very flexible. Otherwise, employment is not necessarily higher than in a system with only permanent contracts. Moreover, from the social point of view, market segmentation is too large. The last two chapters are empirical work applied to Spain. The Spanish experience appears to be particularly useful in this context to draw some lessons of these policies because the unemployment rate is the highest among OECD economies despite the several "policy experiments" implemented in the last two decades. In Chapter 3 the duration pattern of fixed-term contracts and the determinants of the transformation of these into permanent ones are analysed. Evidence is found that fixed-term contracts are used as a screening device instrument. Also, employers use fixed-term contracts until their legal limit. In Chapter 4, we study the effects of fixed-term contracts on the duration distribution of unemployment. It is found that the chances of leaving unemployment for a reference group have increased at short durations, while they have decreased at long durations of unemployment.

The economic downturn and ageing population has caused a rethink of a number of services: social housing providers are, as a result of the Coalition’s housing strategy (mainly enacted by the Localism Act 2011), not only considering who should be given low cost and secure housing, but for the first time, how long people should be housed. Demand is high for social properties and providers are urged to use their scare resources wisely; however, social housing is popularly viewed as a tenancy of last resort. This thesis explores a new phenomenon: why will the introduction of a policy to fix the term (length) of a tenancy be effective when social housing is considered not only to be the least desirable tenancy, but one that causes personal, economic and social difficulty. Surely, these issues alone would be enough of a stimulus for tenants to leave without any further limitations set by the State or the housing provider, if they were able to? This thesis uses the case study method to look at, in a highly qualitative way, the lived experiences of a number of tenants who have resided in their social homes for five years on traditional social tenancies. Fixed term tenancies will typically be five years in length and we are still a number of years away from being able to study what the actual impact will be. The issue is explored by understanding what would be the outcomes if the participants were on fixed term tenancies. As a result, a hermeneutic methodology was required. The study found that, good thing or not, fixed term tenancies are not shunned by likely applicants who, at the point of allocation, are not concerned about what might happen in five years’ time. In addition, an acute shortage of housing (across all tenures) is reducing the expectations of newly-forming households. Few tenants would not be offered a further tenancy (at the same or smaller property) at the end of five years as their circumstances are likely to remain largely unchanged.

PONTIFÍCIA UNIVERSIDADE CATÓLICA DO RIO DE JANEIRO
Este trabalho objetiva, por meio da utilização de um modelo de paridade coberta de juros ajustada aos riscos país e demais riscos (sobretudo domésticos), verificar, estatisticamente, quais são os determinantes da taxa de juros brasileira para títulos públicos pré-fixados de longo prazo - no caso, as Notas do Tesouro Nacional Série F (NTN-Fs) de prazo aproximado de 10 anos, com vencimento em 2017. A variável dependente foi definida como a taxa de retorno das respectivas NTN-Fs, ao passo que as variáveis independentes ou explicativas foram a taxa livre de risco dos Treasuries norte-americanos de 10 anos, o prêmio de risco Brasil e o risco cambial. Os demais riscos (especialmente domésticos), por se tratarem do diferencial entre as NTN-Fs e as outras variáveis, encontram-se dentro do componente de termo do erro. Tendo em vista que as variáveis independentes possuem fortes relações de multicolinearidade - o que trouxe resultados visados para o coeficiente de determinação e aqueles individuais -, optou-se por rodar um modelo VAR e, a partir do mesmo, extrair os graus de endogeneidade de cada variável. Assim, foi possível observar o grau de importância e causalidade das variáveis individualmente e se o modelo estava corretamente especificado - ou seja, se a taxa de juros das NTN-Fs de longo prazo foi de fato explicada pelas demais variáveis. As principais ferramentas do modelo VAR - decomposição de variância e funções impulso-resposta - permitiram tirar importantes conclusões acerca dos impactos defasados de variações ou choques ocorridos nas variáveis independentes sobre a taxa de juros das NTN-Fs analisadas. Os resultados comprovaram que a taxa de juros das NTN-Fs é a variável mais endógena do modelo e, portanto, a dependente, além disso, mostrou que o risco cambial é a variável menos endógena, indicando sua importância cada vez menor na formação das taxas de juros de longo prazo no Brasil. A conclusão mais relevante, contudo, foi a evidência de que existe uma correlação negativa entre a taxa de juros livre de risco e a taxa dos títulos de longo prazo brasileiros, contrariando, pelo menos em 2007, a Teoria das Carteiras, que prevê uma relação positiva entre a taxa livre de risco e o retorno de um ativo.
This study aims to verify statistically, through the utilization of an interest rate covered parity model adjusted to the country-risk and other risks (domestic, mainly), what are the determinants of Brazilian interest rates for long-term public fixed income securities - in this case, the so-called National Treasury Notes - Series F (NTN-Fs) with maturity in approximately 10 years, more precisely, in 2017. The dependent variable was defined as being the yield- to-maturity of the respective NTN-Fs, whereas the independent or explanatory variables were the risk-free rates of the US 10-year Treasuries, the Brazilian country-risk and the exchange rate risk. The other risks (especially domestic ones), as well as they reflect the differential between the NTN-Fs and the other variables, are one of the error term components. Given that the independent variables have strong multicollinearity - which brings biased results to the determination and individual coefficients -, we opted for using a VAR model and, based on it, obtain the endogenous degrees of each variable. Then, it was possible to observe the causality and importance level of the variables individually and if the model was correctly specified - that is, if the long-term NTN-Fs interest rates were in fact explained by the other variables. The main VAR model tools - which are the variance decomposition and the impulse-response functions - allowed us to make important conclusions about the delayed impacts of variations or shocks occurred in the independent variables over the analyzed NTN- Fs interest rates. The results proved that NTN-Fs interest rate is the most endogenous variable of the model and, therefore, the dependent one. The results also showed that the exchange rate risk is the less endogenous variable, suggesting it has a decreasing importance for the long-run interest rate building in Brazil. However, the most important conclusion was the evidence that there is a negative correlation between the risk-free rate and Brazilian long-run securities interest rates, opposing, at least in 2007, the Portfolio Theory, which foresees a positive relationship between the risk-free irate and the return of an asset.

Šiame magistro darbe analizuojami Lietuvos, Latvijos, Estijos ir Rusijos terminuotų darbo sutarčių sudarymo, vykdymo bei nutraukimo ypatumai. Kad nebūtų piktnaudžiaujama terminuotomis sutartimis, valstybės savo darbo statymuose įstatymuose nustato tam tikrus imperatyvius reikalavimus. Darbo tikslas yra palyginti Lietuvos ir minėtų užsienio valstybių darbo įstatymų nuostatas, susijusias su terminuotų sutarčių reglamentavimu, pateikti jų apibendrinimus, aptarti šių teisės normų įgyvendinimo praktikoje problemas bei pateikti pasiūlymus Lietuvos įstatymų leidėjui. Pirmoje darbo dalyje pabrėžiama darbo sutarties instituto svarba, apžvelgiami pagrindiniai valstybių darbo įstatymai, aptariama terminuotos darbo sutarties samprata bei išskiriamos jos rūšys. Antroji dalis yra skirta terminuotų darbo sutarčių sudarymui – joje aptariamas terminuotų darbo sutarčių turinys, kurį sudaro būtinosios ir papildomos sąlygos, apibrėžiamos bendros visoms valstybėms termino nustatymo taisyklės, taip pat analizuojamos terminuotos darbo sutarties prielaidos ir apribojimai. Trečioje darbo dalyje dėmesys skiriamas teisės normų, reglamentuojančių terminuotų darbo sutarčių vykdymą ir keitimą, analizei – pabrėžiami sutarčių keitimo ypatumai, atsižvelgiant į sąlygų keitimo priežastį, jų rūšį ir nuo to, kuriam laikui (terminuotai ar neterminuotai) tos sąlygos keičiamos. Šioje dalyje taip pat aptariami pagal terminuotas darbo sutartis dirbančių darbuotojų nediskriminavimo bei informavimo apie laisvas darbo... [toliau žr. visą tekstą]
In these Master theses are analyzed the characteristics of fixed-term employment contracts in Lithuania, Latvia, Estonia and Russia. To prevent abuse arising from fixed-term employment contracts the countries define imperative requirements in their labour laws. The object of these theses is to compare the provisions of labour laws, related to the regulation of the fixed-term employments contracts, to present the generalization thereof, to discuss the problems of provisions’ realization in practice and to make suggestions to the legislator. In the first part of the theses the importance of employment contract’s institute is pointed, the countries’ main labour laws are reviewed and the conception of employment contract and its types are discussed. The second part is about the conclusion of fixed-term employment contracts: the content of fixed-term employment contracts (obligatory and additional conditions) is discussed, the general rules of term determination are defined, the preconditions and restrictions of fixed-term employment contracts are analyzed. In the third part of theses the rules of law, related to the implementation and amendment of fixed-term employment contracts, are analyzed – it is pointed that the amendments are made according to the reason and duration of amendment and the type of employment conditions to be amended. The principles of non-discrimination of fixed-term workers and information about vacancies are also discussed. The last, fourth, part is about... [to full text]

Neterminuotos darbo sutartys yra bendriausia ir pagrindinė darbdavių bei darbuotojų darbo santykių forma, tačiau tam tikromis aplinkybėmis – nenuolatinio pobūdžio darbams atlikti - vis dažniau atsiranda poreikis darbuotojus įdarbinti pagal terminuotas darbo sutartis, kurios tam tikromis aplinkybėmis labiau atitinka ir darbuotojų ir darbdavių interesus. Šiame magistro darbe yra nagrinėjamos Lietuvos ir Lenkijos darbo teisėje įtvirtintos nuostatos dėl terminuotos darbo sutarties rūšių išskyrimo, jos sudarymo prielaidos, vykdymo ypatumai bei nutraukimo pagrindai ir apribojimai, analizuojamas šių nuostatų įgyvendinimas teismų praktikoje. Taip pat analizuojamas abiejų valstybių terminuotą darbo sutartį reglamentuojančių nuostatų atitikimas EB Tarybos direktyvoje Nr. 1999/70/EB įtvirtintiems bendriesiems reikalavimams, įpareigojantiems kiekvieną valstybę narę nacionaliniuose teisės aktuose įtvirtinti normas, užtikrinančias vienodų sąlygų taikymą pagal terminuotas darbo sutartis dirbantiems darbuotojams, saugant juos nuo diskriminacijos bei neleisti piktnaudžiauti sudarant terminuotas darbo sutartis. Pažymėtina, jog dauguma terminuotą darbo sutartį reglamentuojančių normų Lietuvos ir Lenkijos darbo kodeksuose yra suderintos su Europos Sąjungos ir tarptautiniais teisės aktais. Terminuotos darbo sutarties analizė, lyginant abiejų valstybių nacionalinės darbo teisės normas, rodo, jog Lenkijos darbo kodeksas labiau orientuotas į liberalius, paremtus šalių lygybe, darbo teisinius... [toliau žr. visą tekstą]
Open-ended employment contracts are the most general and the main form of employment relationship between employers and employees; however, in certain circumstances – for the purposes of performing temporary work – there is an increasing need for recruitment of employees under fixed-term employment contracts, which in certain circumstances better respond to the interests of both employees and employers. This master thesis considers the provisions stipulated in the Lithuanian and Polish labour law regarding discernment of the fixed-term employment contract, preconditions for its conclusion, specific features of its execution as well as the basis for and restrictions on its termination; implementation of these provisions in judicial practice is considered. The author also analyses compliance of the provisions of both states regulating the fixed-term employment contract with the general requirements set forth in Council Directive 1999/70/EC and committing every member state to lay down in national legislation the norms ensuring equal treatment for fixed-term workers by protecting them against discrimination and to prevent abuse when concluding fixed-term employment contracts. It should be noted that the majority of the norms regulating the fixed-term employment contract in the Lithuanian Labour Code and the Polish Labour Code have been harmonised with legal acts of the European Union and international legal acts. Analysis of the fixed-term employment contract by comparing both... [to full text]

As offshore reservoirs are depleted, the seabed may subside. Furthermore, the extreme crests estimates are now commonly higher than obtained previously due to improved understanding of statistics of non-linear irregular waves. Consequently, bottom fixed installations which have previously had sufficient clearance between the deck and the sea surface may be in a situation where wave impact with the deck must be considered at relevant probability levels. In the present paper, we investigate the long-term area statistics for maximum crest height under a fixed platform deck for 2nd order short crested and long crested sea based on numerical simulations as a function of platform deck dimension for jackets. The results are for one location in the northern North Sea, but some key results are also reported and verified for a more benign southern North Sea location. Time domain simulations for long crested and short crested waves over a spatial domain with dimension of a platform deck are performed, and relevant statistics for airgap assessment determined. Second order waves are simulated for the different cells in the (Hs, Tp) scatter diagram for Torsethaugen two-peak wave spectrum for long-crested and short-crested sea. A total of 1000 3-hour sea states are generated per cell, and time series generated for 160 spatial points under a platform deck. Short-term and long-term statistics are established for the maximum crest height as function of platform dimension; inline and transverse to the wave direction, and over the area. Results are given for the linear sea and for the second order time series. The annual q-probability estimates for the maximum crest height over area as a function of platform dimension is determined for a location at the Norwegian Continental Shelf by weighting the short-term statistics for the individual cells in the scatter diagram with the long-term probability of occurrence of the sea state. To reduce the number of numerical second order simulations, the effect of excluding cells that have a negligible effect on the long term extreme crest estimate is discussed. The percentiles in the distribution of maximum crest (over area) in design sea states that corresponds to the extreme values obtained from the long-term analysis are determined for long crested and short crested sea. The increase in the extreme crest over an area compared to the point in space estimate is estimated for both linear and second order surface elevation.

The first-mile, last-mile problem is a significant deterrent for potential transit riders, especially in suburban neighborhoods with low density. Transit agencies have typically sought to solve this problem by adding parking spaces near transit stations and adding stops to connect riders to fixed-route transit. However, these measures are often only short-term solutions. In the last few years, transit agencies have tested whether new mobility services, such as ridehailing, ridesharing, and microtransit, can offer fast, reliable connections to and from transit stations. However, there is limited research that evaluates the potential impacts of these projects. Concurrently, there is growing interest in the future of automated vehicles (AVs) and the potential of AVs to solve this first-mile problem by reducing the cost of providing these new mobility services to promote access to transit. This paper expands upon existing research to model the simulate the travel and revenue impacts of a fleet of automated vehicles that provide transit access services in the San Francisco Bay Area offered over a range of fares. The model simulates a fleet of AVs for first-mile transit access at different price points for three different service models (door-to-door ridehailing and ridesharing and meeting point ridesharing services). These service models include home-based drop-off and pick-up for single passenger service (e.g., Uber and Lyft), home-based drop-off and pick-up for multi-passenger service (e.g., microtransit), and meeting point multi-passenger service (e.g., Via).

1.1 Macroeconomic summary Economic recovery has consistently outperformed the technical staff’s expectations following a steep decline in activity in the second quarter of 2020. At the same time, total and core inflation rates have fallen and remain at low levels, suggesting that a significant element of the reactivation of Colombia’s economy has been related to recovery in potential GDP. This would support the technical staff’s diagnosis of weak aggregate demand and ample excess capacity. The most recently available data on 2020 growth suggests a contraction in economic activity of 6.8%, lower than estimates from January’s Monetary Policy Report (-7.2%). High-frequency indicators suggest that economic performance was significantly more dynamic than expected in January, despite mobility restrictions and quarantine measures. This has also come amid declines in total and core inflation, the latter of which was below January projections if controlling for certain relative price changes. This suggests that the unexpected strength of recent growth contains elements of demand, and that excess capacity, while significant, could be lower than previously estimated. Nevertheless, uncertainty over the measurement of excess capacity continues to be unusually high and marked both by variations in the way different economic sectors and spending components have been affected by the pandemic, and by uneven price behavior. The size of excess capacity, and in particular the evolution of the pandemic in forthcoming quarters, constitute substantial risks to the macroeconomic forecast presented in this report. Despite the unexpected strength of the recovery, the technical staff continues to project ample excess capacity that is expected to remain on the forecast horizon, alongside core inflation that will likely remain below the target. Domestic demand remains below 2019 levels amid unusually significant uncertainty over the size of excess capacity in the economy. High national unemployment (14.6% for February 2021) reflects a loose labor market, while observed total and core inflation continue to be below 2%. Inflationary pressures from the exchange rate are expected to continue to be low, with relatively little pass-through on inflation. This would be compatible with a negative output gap. Excess productive capacity and the expectation of core inflation below the 3% target on the forecast horizon provide a basis for an expansive monetary policy posture. The technical staff’s assessment of certain shocks and their expected effects on the economy, as well as the presence of several sources of uncertainty and related assumptions about their potential macroeconomic impacts, remain a feature of this report. The coronavirus pandemic, in particular, continues to affect the public health environment, and the reopening of Colombia’s economy remains incomplete. The technical staff’s assessment is that the COVID-19 shock has affected both aggregate demand and supply, but that the impact on demand has been deeper and more persistent. Given this persistence, the central forecast accounts for a gradual tightening of the output gap in the absence of new waves of contagion, and as vaccination campaigns progress. The central forecast continues to include an expected increase of total and core inflation rates in the second quarter of 2021, alongside the lapse of the temporary price relief measures put in place in 2020. Additional COVID-19 outbreaks (of uncertain duration and intensity) represent a significant risk factor that could affect these projections. Additionally, the forecast continues to include an upward trend in sovereign risk premiums, reflected by higher levels of public debt that in the wake of the pandemic are likely to persist on the forecast horizon, even in the context of a fiscal adjustment. At the same time, the projection accounts for the shortterm effects on private domestic demand from a fiscal adjustment along the lines of the one currently being proposed by the national government. This would be compatible with a gradual recovery of private domestic demand in 2022. The size and characteristics of the fiscal adjustment that is ultimately implemented, as well as the corresponding market response, represent another source of forecast uncertainty. Newly available information offers evidence of the potential for significant changes to the macroeconomic scenario, though without altering the general diagnosis described above. The most recent data on inflation, growth, fiscal policy, and international financial conditions suggests a more dynamic economy than previously expected. However, a third wave of the pandemic has delayed the re-opening of Colombia’s economy and brought with it a deceleration in economic activity. Detailed descriptions of these considerations and subsequent changes to the macroeconomic forecast are presented below. The expected annual decline in GDP (-0.3%) in the first quarter of 2021 appears to have been less pronounced than projected in January (-4.8%). Partial closures in January to address a second wave of COVID-19 appear to have had a less significant negative impact on the economy than previously estimated. This is reflected in figures related to mobility, energy demand, industry and retail sales, foreign trade, commercial transactions from selected banks, and the national statistics agency’s (DANE) economic tracking indicator (ISE). Output is now expected to have declined annually in the first quarter by 0.3%. Private consumption likely continued to recover, registering levels somewhat above those from the previous year, while public consumption likely increased significantly. While a recovery in investment in both housing and in other buildings and structures is expected, overall investment levels in this case likely continued to be low, and gross fixed capital formation is expected to continue to show significant annual declines. Imports likely recovered to again outpace exports, though both are expected to register significant annual declines. Economic activity that outpaced projections, an increase in oil prices and other export products, and an expected increase in public spending this year account for the upward revision to the 2021 growth forecast (from 4.6% with a range between 2% and 6% in January, to 6.0% with a range between 3% and 7% in April). As a result, the output gap is expected to be smaller and to tighten more rapidly than projected in the previous report, though it is still expected to remain in negative territory on the forecast horizon. Wide forecast intervals reflect the fact that the future evolution of the COVID-19 pandemic remains a significant source of uncertainty on these projections. The delay in the recovery of economic activity as a result of the resurgence of COVID-19 in the first quarter appears to have been less significant than projected in the January report. The central forecast scenario expects this improved performance to continue in 2021 alongside increased consumer and business confidence. Low real interest rates and an active credit supply would also support this dynamic, and the overall conditions would be expected to spur a recovery in consumption and investment. Increased growth in public spending and public works based on the national government’s spending plan (Plan Financiero del Gobierno) are other factors to consider. Additionally, an expected recovery in global demand and higher projected prices for oil and coffee would further contribute to improved external revenues and would favor investment, in particular in the oil sector. Given the above, the technical staff’s 2021 growth forecast has been revised upward from 4.6% in January (range from 2% to 6%) to 6.0% in April (range from 3% to 7%). These projections account for the potential for the third wave of COVID-19 to have a larger and more persistent effect on the economy than the previous wave, while also supposing that there will not be any additional significant waves of the pandemic and that mobility restrictions will be relaxed as a result. Economic growth in 2022 is expected to be 3%, with a range between 1% and 5%. This figure would be lower than projected in the January report (3.6% with a range between 2% and 6%), due to a higher base of comparison given the upward revision to expected GDP in 2021. This forecast also takes into account the likely effects on private demand of a fiscal adjustment of the size currently being proposed by the national government, and which would come into effect in 2022. Excess in productive capacity is now expected to be lower than estimated in January but continues to be significant and affected by high levels of uncertainty, as reflected in the wide forecast intervals. The possibility of new waves of the virus (of uncertain intensity and duration) represents a significant downward risk to projected GDP growth, and is signaled by the lower limits of the ranges provided in this report. Inflation (1.51%) and inflation excluding food and regulated items (0.94%) declined in March compared to December, continuing below the 3% target. The decline in inflation in this period was below projections, explained in large part by unanticipated increases in the costs of certain foods (3.92%) and regulated items (1.52%). An increase in international food and shipping prices, increased foreign demand for beef, and specific upward pressures on perishable food supplies appear to explain a lower-than-expected deceleration in the consumer price index (CPI) for foods. An unexpected increase in regulated items prices came amid unanticipated increases in international fuel prices, on some utilities rates, and for regulated education prices. The decline in annual inflation excluding food and regulated items between December and March was in line with projections from January, though this included downward pressure from a significant reduction in telecommunications rates due to the imminent entry of a new operator. When controlling for the effects of this relative price change, inflation excluding food and regulated items exceeds levels forecast in the previous report. Within this indicator of core inflation, the CPI for goods (1.05%) accelerated due to a reversion of the effects of the VAT-free day in November, which was largely accounted for in February, and possibly by the transmission of a recent depreciation of the peso on domestic prices for certain items (electric and household appliances). For their part, services prices decelerated and showed the lowest rate of annual growth (0.89%) among the large consumer baskets in the CPI. Within the services basket, the annual change in rental prices continued to decline, while those services that continue to experience the most significant restrictions on returning to normal operations (tourism, cinemas, nightlife, etc.) continued to register significant price declines. As previously mentioned, telephone rates also fell significantly due to increased competition in the market. Total inflation is expected to continue to be affected by ample excesses in productive capacity for the remainder of 2021 and 2022, though less so than projected in January. As a result, convergence to the inflation target is now expected to be somewhat faster than estimated in the previous report, assuming the absence of significant additional outbreaks of COVID-19. The technical staff’s year-end inflation projections for 2021 and 2022 have increased, suggesting figures around 3% due largely to variation in food and regulated items prices. The projection for inflation excluding food and regulated items also increased, but remains below 3%. Price relief measures on indirect taxes implemented in 2020 are expected to lapse in the second quarter of 2021, generating a one-off effect on prices and temporarily affecting inflation excluding food and regulated items. However, indexation to low levels of past inflation, weak demand, and ample excess productive capacity are expected to keep core inflation below the target, near 2.3% at the end of 2021 (previously 2.1%). The reversion in 2021 of the effects of some price relief measures on utility rates from 2020 should lead to an increase in the CPI for regulated items in the second half of this year. Annual price changes are now expected to be higher than estimated in the January report due to an increased expected path for fuel prices and unanticipated increases in regulated education prices. The projection for the CPI for foods has increased compared to the previous report, taking into account certain factors that were not anticipated in January (a less favorable agricultural cycle, increased pressure from international prices, and transport costs). Given the above, year-end annual inflation for 2021 and 2022 is now expected to be 3% and 2.8%, respectively, which would be above projections from January (2.3% and 2,7%). For its part, expected inflation based on analyst surveys suggests year-end inflation in 2021 and 2022 of 2.8% and 3.1%, respectively. There remains significant uncertainty surrounding the inflation forecasts included in this report due to several factors: 1) the evolution of the pandemic; 2) the difficulty in evaluating the size and persistence of excess productive capacity; 3) the timing and manner in which price relief measures will lapse; and 4) the future behavior of food prices. Projected 2021 growth in foreign demand (4.4% to 5.2%) and the supposed average oil price (USD 53 to USD 61 per Brent benchmark barrel) were both revised upward. An increase in long-term international interest rates has been reflected in a depreciation of the peso and could result in relatively tighter external financial conditions for emerging market economies, including Colombia. Average growth among Colombia’s trade partners was greater than expected in the fourth quarter of 2020. This, together with a sizable fiscal stimulus approved in the United States and the onset of a massive global vaccination campaign, largely explains the projected increase in foreign demand growth in 2021. The resilience of the goods market in the face of global crisis and an expected normalization in international trade are additional factors. These considerations and the expected continuation of a gradual reduction of mobility restrictions abroad suggest that Colombia’s trade partners could grow on average by 5.2% in 2021 and around 3.4% in 2022. The improved prospects for global economic growth have led to an increase in current and expected oil prices. Production interruptions due to a heavy winter, reduced inventories, and increased supply restrictions instituted by producing countries have also contributed to the increase. Meanwhile, market forecasts and recent Federal Reserve pronouncements suggest that the benchmark interest rate in the U.S. will remain stable for the next two years. Nevertheless, a significant increase in public spending in the country has fostered expectations for greater growth and inflation, as well as increased uncertainty over the moment in which a normalization of monetary policy might begin. This has been reflected in an increase in long-term interest rates. In this context, emerging market economies in the region, including Colombia, have registered increases in sovereign risk premiums and long-term domestic interest rates, and a depreciation of local currencies against the dollar. Recent outbreaks of COVID-19 in several of these economies; limits on vaccine supply and the slow pace of immunization campaigns in some countries; a significant increase in public debt; and tensions between the United States and China, among other factors, all add to a high level of uncertainty surrounding interest rate spreads, external financing conditions, and the future performance of risk premiums. The impact that this environment could have on the exchange rate and on domestic financing conditions represent risks to the macroeconomic and monetary policy forecasts. Domestic financial conditions continue to favor recovery in economic activity. The transmission of reductions to the policy interest rate on credit rates has been significant. The banking portfolio continues to recover amid circumstances that have affected both the supply and demand for loans, and in which some credit risks have materialized. Preferential and ordinary commercial interest rates have fallen to a similar degree as the benchmark interest rate. As is generally the case, this transmission has come at a slower pace for consumer credit rates, and has been further delayed in the case of mortgage rates. Commercial credit levels stabilized above pre-pandemic levels in March, following an increase resulting from significant liquidity requirements for businesses in the second quarter of 2020. The consumer credit portfolio continued to recover and has now surpassed February 2020 levels, though overall growth in the portfolio remains low. At the same time, portfolio projections and default indicators have increased, and credit establishment earnings have come down. Despite this, credit disbursements continue to recover and solvency indicators remain well above regulatory minimums. 1.2 Monetary policy decision In its meetings in March and April the BDBR left the benchmark interest rate unchanged at 1.75%.

In the face of the multiple shocks currently experienced by the domestic economy (resulting from the drop in oil prices and the appearance of a global pandemic), the Colombian financial system is in a position of sound solvency and adequate liquidity. At the same time, credit quality has been recovering and the exposure of credit institutions to firms with currency mismatches has declined relative to previous episodes of sudden drops in oil prices. These trends are reflected in the recent fading of red and blue tonalities in the performance and credit risk segments of the risk heatmaps in Graphs A and B.1 Naturally, the sudden, unanticipated change in macroeconomic conditions has caused the appearance of vulnerabilities for short-term financial stability. These vulnerabilities require close and continuous monitoring on the part of economic authorities. The main vulnerability is the response of credit and credit risk to a potential, temporarily extreme macroeconomic situation in the context of: (i) recently increased exposure of some banks to household sector, and (ii) reductions in net interest income that have led to a decline in the profitability of the banking business in the recent past. Furthermore, as a consequence of greater uncertainty and risk aversion, occasional problems may arise in the distribution of liquidity between agents and financial markets. With regards to local markets, spikes have been registered in the volatility of public and private fixed income securities in recent weeks that are consistent with the behavior of the international markets and have had a significant impact on the liquidity of those instruments (red portions in the most recent past of some market risk items on the map in Graph A). In order to adopt a forward-looking approach to those vulnerabilities, this Report presents a stress test that evaluates the resilience of credit institutions in the event of a hypothetical scenario thatseeks to simulate an extreme version of current macroeconomic conditions. The scenario assumes a hypothetical negative growth that is temporarily strong but recovers going into the middle of the coming year and has extreme effects on credit quality. The results suggest that credit institutions have the ability to withstand a significant deterioration in economic conditions in the short term. Even though there could be a strong impact on credit, liquidity, and profitability under the scenario being considered, aggregate capital ratios would probably remain at above their regulatory limits over the horizon of a year. In this context, the recent measures taken by both Banco de la República and the Office of the Financial Superintendent of Colombia that are intended to help preserve the financial stability of the Colombian economy become highly relevant. In compliance with its constitutional objectives and in coordination with the financial system’s security network, Banco de la República will continue to closely monitor the outlook for financial stability at this juncture and will make the decisions that are necessary to ensure the proper functioning of the economy, facilitate the flow of sufficient credit and liquidity resources, and further the smooth functioning of the payment system. Juan José Echavarría Governor