Congress won in ill-advised regional transfers plan
Q3 2024 growth at 2% was low in y/y terms, although higher than population growth, the lowest threshold to keep Colombia from getting poorer. Many things stand out. First, there is a base effect, because 2023 GDP growth was low, at -0.6% during Q3, and a very disappointing 0.6% for the year. Second, Q3 2024 growth was almost completely driven by entertainment services (14.1%), agriculture (in general, the primary sector, 10.7%), banking (4.5%), and construction (4%). In entertainment, growth was fueled by online betting, now 40% of the sector, up from 10% in 2020. So Colombia is essentially growing on bets. The future still looks kind of bleak. Political and fiscal downside risks are significant, and ill-conceived reforms will continue to be discussed next year. So, alas, it is not difficult to conclude that low growth will probably persist in Q4, and in 2025.
The constitutional reform to the transfer system of resources from the central government to the regions (SGP) has been approved. The 8th debate concluded in the plenary of the House, with a 124-3 vote. Some very concerning changes were introduced into the version approved on the Senate floor. President Gustavo Petro has unintentionally found in this reform a way to boost his standing in Congress, while improving his image in the regions. Thanks to the promise of substantial additional resources coming to local dignitaries, the probability of getting health and labor reforms is on the rise. Here’s a clear example of killing two birds with one stone.
Among early candidates for the 2026 presidential campaign are journalist Vicky Davila, Senator María Fernanda Cabal, former Antioquia Governor Sergio Fajardo and economist Juan Daniel Oviedo. Many more are to come. In early polls, Fajardo (68, center-left) has consistently outperformed his peers, and exhibits an upward trend. So have former Bogotá mayor Claudia Lopez (54, center-left), senator Gustavo Bolivar (59, extreme-left), senator Juan Manuel Galán (52, center-liberal), and former vice-president Germán Vargas (62, center-right). Why does nearly everybody’s trendline seem to be rising? First, there is still a large pool of undecided people, from whom these names attract adherents. Second, the elections are still 18 months away, and these polls indicate a lack of accurate representation of voter intention. Still, these polls play a role in determining the initial candidate lineup for the actual campaign, which will start in earnest around mid-2025.
In December 2023, Finance Minister Ricardo Bonilla urgently needed the approval of the Congressional Public Credit Commission to increase the nation’s debt ceiling. Six members of Congress belonging to that commission allegedly blackmailed him, asking for pork. Allegedly Bonilla, aided by then-interior minister Luis Fernando Velasco, gave in, and instructed the heads of the Disaster Emergency Agency (UNGRD) to allocate COP 92 billion (close to $20 million) in contracts for three municipalities in which said members of Congress or their allies could grab such monies. The Prosecutor's Office is investigating this affair and has made a deal with a critical witness. Bonilla announced that he is collaborating with the investigation. Meanwhile, an ad hoc finance minister, current Agriculture Minister Helga Rivas, has been appointed to handle all matters related to the UNGRD.
Now read on...
Register to sample a report