Petro Forces Banks to Fund Climate Emergency

The confrontation has been building since August 2024, when Colombia’s banking sector struck a deal to avoid exactly this moment. President Gustavo Petro had threatened forced investment mandates — requiring banks to channel a fixed percentage of deposits toward government-designated sectors. The banks countered with a voluntary Credit Pact: 254.7 trillion pesos ($60 billion) in lending to five strategic sectors over 18 months. Petro withdrew his legislation. On February 12, he declared that deal broken.

Using Decree 0150, issued February 11 under a climate emergency triggered by catastrophic flooding in Córdoba and other northern departments — over 50,000 families affected, infrastructure destroyed, crops ruined — Petro announced the forced investments would proceed via emergency decree, bypassing Congress entirely. On Wednesday, after six former finance ministers published an open letter warning against the policy, the president responded bluntly: if bankers reject forced investments and refuse to pay taxes, how exactly do they expect to finance the climate emergency?

A bipartisan revolt

The letter, dated February 18, carries unusual weight. Its six signatories — Alberto Carrasquilla, José Antonio Ocampo, José Manuel Restrepo, Juan Camilo Restrepo, Juan Carlos Echeverry, and Mauricio Cárdenas — span Colombia’s political spectrum from Ocampo, a former UN Under-Secretary-General who served in Petro’s own cabinet, to Carrasquilla, an architect of conservative fiscal policy. They warned that forced investments raise interest rates, reduce credit availability, and punish those who need financing most. Only Venezuela under Chávez and Bolivia under Morales have implemented similar schemes this century, they wrote — precedents Colombia should not follow.

The banking lobby’s numbers sharpen the argument. Asobancaria estimates a new forced investment of roughly 35 trillion pesos ($8 billion) would add 50 to 100 basis points to lending rates, shrink the loan portfolio by 0.9 percentage points, and reduce GDP growth by 0.3 points. Meanwhile, the Credit Pact that Petro called a failure has already disbursed 228.1 trillion pesos — 90% of the target — with housing exceeding its goal at 119% and manufacturing at 83%. Colombia’s financial depth, already stalled at 44% of GDP against a regional potential of 65%, risks sliding further. Petro is betting the emergency justifies the intervention. The bankers, backed by six finance ministers who collectively ran the economy across four administrations, are betting it doesn’t. This is part of The Rio Times’ daily coverage of Latin American affairs and financial news.

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