Colombia: Gustavo Petro’s radical proposals are going to be almost impossible politically

RIO DE JANEIRO, BRAZIL – The leader of sovereign ratings for Colombia of the rating agency Fitch Ratings, Richard Francis, commented on the possibility that the presidential candidate may be able to carry out several of his political campaign proposals.

The analyst ratified what he said in a report last Monday in which he indicated that the balance of institutions is strong in Colombia.

“The balances of powers in Colombia are quite strong, (Petro) will not have anywhere near a majority in Congress and should negotiate with the other parties. His proposals will have to be more centrist in the end,” Francis said in an interview with LaFM.

He added: “I do not see changes in macroeconomic policy in general; Gustavo Petro will want to increase social spending, but he must pay for that and would have to raise taxes, but with the current fiscal situation in Colombia, any candidate is going to have to think about raising taxes, and the difficult thing is to know how and when to do it” especially taking into account the scenario of massive protests in 2021.

According to Fitch’s Richard Francis, candidate Gustavo Petro talks about quite radical changes, but “politically it is going to be almost impossible to make them”, adding that he does not see the possibility of making those changes because of the institutionalism of the Congress, the courts and the independence of the Bank of the Republic.

“It is one thing to talk about changes when he expects to be elected and another when he is already elected”, assured the expert.

Francis said in the radio interview that “we will have to see what he (Petro) can do if he is elected, his party does not have more than 20% of the Congress, and other center-left parties are not going to be so radical in their decisions”. He then considered that Gustavo Petro would have to go to the center at the end of his political strategy.

PENSION REFORM

Richard Francis said that there are problems with the pension system. The coverage is relatively low in Colombia as it happens in Chile and Peru, but it happens, above all, in Colombia, in a country with so much labor informality.

In this scenario, the candidate Gustavo Petro has proposed nationalizing the savings of workers saved in private pension funds.

Pension funds, said the Fitch analyst, are essential for the financial market because, in addition to managing pensions, they help mobilize resources to finance companies that issue bonds and other assets in the local market.

In addition, Francis considered that pension debt is not unsustainable in Colombia because, although it represents approximately 4% of GDP (US$10.5 billion), that has not changed. Although it is a high pressure, it has not increased sharply.

He said that high pensions mean long-term pressure on Colombia’s finances.

ENDING OIL EXPLORATION

On the proposal to stop oil exploration in Colombia made by the Colombia Humana candidate, Richard Francis said that to carry out that idea, it should be considered that almost 10% of all the nation’s income comes from oil.

On the other hand, he said that oil has risen and the Colombian peso in history was linked to the price of crude oil, but today, there is much uncertainty in the world, and when that happens, people migrate to the dollar, investors do not like uncertainty, and it is difficult to say if the dollar is going to rise or fall.

With information from Valora Analitik