A dismal legislature

COLOMBIA - Report 02 Jul 2019 by Juan Carlos Echeverry, Andres Escobar and Mauricio Santa Maria

A new political battleground has emerged, due to President Iván Duque’s plan to resume aerial spreading of the herbicide glyphosate over coca plantations. The peace agreement signed with the FARC mandated manual eradication -- quite a controversial issue, as those coca-growing regions typically lack the rule of law necessary for compliance; indeed, there, the law of the jungle operates. Due to this dismal state of affairs, and the lack of instruments for countering the mother of all Colombian wars -- cocaine agribusiness – the current and past presidential administrations decided to reinstate glyphosate spreading. This was effective for the first 15 years of this century. An urgent solution is needed – and it’s not surprising that the government decided to revert to the only thing that has worked.

But there has been an outcry from the left, claiming this represents a new declaration of war. We reason that the Colombian conflict has only changed so much, with new combatants trying to fill the void left by the demobilized FARC guerrilleros, and a new justice system for former insurgents who in 2016 decided to stop killing, kidnapping, raping and narco-trafficking. Nowadays, a costly infrastructure of people and new agencies is dedicated to supporting peace.

The bad guys’ strength has not necessarily decreased with the peace process, in no small part due to the spread of coca plantations. The state is effective in destroying those enemies that threaten the political order, but less so in undermining the deep origin of the conflict, and its unspeakable manifestations against the population.

The 2019 Medium-Term Fiscal Framework did not disappoint, in terms of coming packed with novelties of different flavors. We focus here on the ones we consider key: accounting, privatizations, fiscal policy and long-term public spending. The political impossibility to even mention the need for future tax reforms results in unrealistically low levels of government spending by the end of next decade.

Despite partial recovery of oil prices, external imbalances have been on the rise and, for the first time in this post-crisis period, Colombia registered two consecutive quarters (Q4 2018 and Q1 2019) of current account deficits of 4.5% of GDP or more. We shouldn’t take this trend lightly. The central government’s decision to stick to its original fiscal deficit reduction path is a move in the right direction. Keeping the current stance on monetary policy, though, with relatively low intervention rates, might not be a wise decision.

Now read on...

Register to sample a report