The Apple of Discord
The 2018 national budget as approved by Congress included some significant differences from the original proposal, mainly in the partial restoration of severe proposed cuts to investment and spending. Congress raised investment to 4.1% of GDP, from the proposed 3.5% of GDP (yet it’ll still be down from the 4.5% of GDP in 2017). Education, mining, energy and social inclusion also saw proposed spending cuts partially restored, as the original appropriations fell well below requirements. Funds for sports venue construction, in line for cuts of more than 50%, were also increased.
After seven months of uninterrupted policy rate cuts totaling 200 bp, the Central Bank’s board decided, at its September meeting, to pause. This was not completely unexpected, but more than a few analysts wondered whether the majority of the board would change its stance in the growth vs. inflation dilemma. Then, in October, in a move that surprised many, the Board agreed on cutting further.
More cuts are to be expected, but it is hard to know whether there has been a change of heart among Board members that warrants expecting further rate cuts as soon as November and December, or if the Central Bank will wait until the beginning of 2018 to make the next move. What is clear is that the Board is paying more attention to growth now and will surely take a close look at Q3 GDP numbers coming out in mid-November, to decide where to go from there.
The really controversial issues in executing the peace agreement with the FARC are the rule of law, bringing all wrongdoers to justice and the rights-based state. Since by definition guerrilleros are people breaking the law, the key of any peace process is how to bend the law and its application to reintegrate them into civilian life. So the essential currency in the peace process was the definition and application of justice. Under the creative and intricate chosen method, a whole new parallel justice system has been created. Experts voice concern mainly over two provisions. First, there’s the tricky concept of “active or determinant participation;” and second, the fact that third parties not directly involved can be judged. These two issues could create a humongous gray zone, in which almost anyone could be called to account for events occurring sometime during over 50 years of conflict.
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