Colombia’s President Petro scares away international investments, kills economic security

By Sabrina Martín

The arrival of Gustavo Petro to the Presidency of Colombia impacted the rampant increase of the dollar against the peso, the official currency.

It was also a hard blow to the sense of security that existed in that country’s financial and business world.

A recent Bank of America document gives a glimpse of the uncertainty now felt by business people inside and outside the country, given the possibility that Petro’s economic policies may shake the table of investments and trade relations.

According to the banking entity, the president’s statements would make it difficult for Colombia to recover its economic credibility after statements related to the dollar price, oil exploration contracts, and announcements that show the latent insistence on adding taxes.

“Regaining lost credibility can be very difficult, and investors may need to see to believe,” reads the report known by Valora Analitik.

Bank of America’s study came after the world leader in financial services, JP Morgan, also expressed its opinion on the bad economic moment the country is facing due to the uncertainty caused by “determinations made by the national government”.

These documents show an international alert about what is happening in the South American country, especially because Colombia’s primary trading partner is the United States, a country that Petro has dedicated himself to attacking in recent weeks.

PETRO’S OBSESSION WITH CONTROLLING THE ECONOMY

In one of his speeches, Petro even stated that he would add taxes to high pensions, a situation that generated concern in Colombia and the United States.

Hours later, the president retracted his statement, but in the meantime, generated reactions.

U.S. chemical and manufacturing, computer and communications, and information technology industries sent a letter to the Colombian ambassador, Luis Gilberto Murillo, expressing concern about the announcement.

“We would like to express our grave concern over Colombia’s recent tax reform, which establishes new requirements for U.S. companies making investments and exports to Colombia,” the missive states.

“The imposition of new taxes on U.S. companies selling goods to Colombia would nullify the tariff-free treatment granted to U.S. exports to Colombia,” the document refers.

Today, the business sector is scared that Petro’s tax reform seeks to impose two taxes on non-residents, becoming one more obstacle for new and recurring investments.

But the uncertainty among local business people is even more evident because the country -facing inflation that touches historical ceilings- must also deal with the possibility of unilateral decisions that will further affect the private sector.

María José Bernal Gaviria, director of Fenalco Antioquia, explained the general outlook that generates concern in the business sector:

“There is a lot of uncertainty in making investment decisions because there is the perfect storm: legal, economic, political uncertainty, world recession, inflation, and the super volatile exchange rate,” she explained.

“The devaluation of the peso has been abysmal, and all this has hurt us a lot.

“Raising the minimum wage, unilaterally, will generate more inflation, reduction of vacancies, staff cuts, and the difficulty of creating new companies that would generate employment.

“It generates panic in many businessmen,” he added.

It would be a mistake on the part of the Colombian leftist president to continue with announcements that hit the economic credibility because beyond the damage that invasive tax reform could generate, what generates greater uncertainty is Petro’s communication strategy that has managed to raise nervousness to the point that it could scare away the business sector.

With information from Gaceta