What Jumps Out: TFIF

Colombia is a madhouse at the best of times; the past seven days have been exceptional even by its lofty standards.

1. Tragic assassination attempt on Miguel Uribe.
2. Multiple bomb attacks in the Cali region.
3. Gustavo Petro signs decree on labor reform referendum.
4. Multiple parties sign a letter stating that the referendum via decree constitutes a Coup d’état.
5. Labor reform 2.0 advancing in the senate/congress.
6. Fiscal reform suspended.
7. May inflation be lower than expected?
8. Continued poor tax returns.
9. Petro again muttering about a national assembly.

There is little transparency, but here are some brief thoughts. In the case of Miguel Uribe, everyone should focus on sending their prayers to the family at this time and calling for national unity. Instead, there are far too many, predictably, trying to exploit the situation for their political gain.

Kudos to those who have followed the path of consolidation (90% of them outside Medellín) and to the others (90% from Medellín) who want to be on the same side of the conversation as Marco Rubio & Benjamin Netanyahu, who simply had to comment, perhaps tone down the rhetoric, it is helping no-one at all in Colombia. There are no clear conclusions as to what happened, and the follow-up terrorism in Cali has only muddied the waters. There is a lot of investigation to be done, and that in Colombia invariably takes a long time.

The referendum isn’t a Coup d’état, and is best left to the courts to decide. Even four members of the cabinet didn’t sign in support. Personally, as Petro has hinted himself, I can see the referendum being scrapped if labor reform 2.0 is successful (now 70% approved), and there seems to be more cross-party support than previously. Regardless, the referendum has to garner over 13 million votes – that is a huge hurdle in this country. As for the national assembly, he’d be lucky to get it half-organized before leaving in 14 months.

The fiscal rule news is a real concern; the Peso dropped 1% post-announcement. We aren’t here just because of the Petro government, but they are holding the baby, and it’s their problem to try to fix. It remains to be seen, at a time of falling oil prices and tax revenues, combined with climbing imports, what can be done. Those tax revenues YTD (May) stand at $30bn, around $1.5bn below expectations.

May inflation (5.05%) from Departamento Administrativo Nacional de Estadística – DANE Colombia was considerably lower than April (5.16%) and also the consensus of 5.10%. However, with the Fedesarrollo YE estimate recently rising from 4.4%-4.8%, it’s unlikely that Banco de la República – Colombia will make any move from 9.25% at month end.

I don’t know about anyone else in Colombia, but perhaps we should just cancel Friday and stay in bed.

Regards.

Roops.

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Presidential candidate and Senator Miguel Uribe Turbay with his wife, Maria Claudia Tarazona. (source: social media)