Finance Minister Alberto Carrasquilla Replaced By José Manuel Restrepo As Colombia’s Finance Minister After Tax Package Leads To Deadly Nationwide Protests

Yesterday, Colombian finance minister Alberto Carrasquilla (above) submitted his resignation to President Ivan Duque, after the fiscal reform package he authored led to protests and violence across Colombia leaving at least 19 dead. Carrasquilla became the personification and villain of the tax package—and dissatisfaction with the Duque administration more broadly—after admitting to Colombian journalist Vicky Davila in the weeks leading up to the protests that as one of Colombia’s elite, he had no idea how much basic staples like rice or eggs cost the Colombian consumer.

Let them eat eggs

According to Colombia’s public functionary registry, Carrasquillo earns a compensation package of just over $5,000 USD, or roughly 20x the Colombian minimum wage. While the salary is not exorbitant, Carrasquilla doomed himself—and perhaps his tax reform package when he went onto Colombian media to defend the proposal. Colombian journalist Vicky Dávila challenged Carrasquilla about the cost of living faced by Colombians, and the effects of the tax increases, including eggs, which would be taxed under the fiscal reform package—while sugary soft drinks would remain exempt. Carrasquilla’s answer to the cost Colombian consumers pay for a dozen eggs:

“On the issue of eggs, it depends on its quality. Let’s say $1,800 COP (48 cents, US) a dozen or something like that.”

A dozen eggs in Colombia costs an average of approximately $8,000 COP ($2.20 USD), though that price may fluctuate widely based on grade, packaging and purchase channel.

Juan Pablo Zárate, the technical deputy minister of finance, also submitted his resignation yesterday. Like Carrasquilla, Zarate also held finance ministry positions in both the administrations of Alvaro Uribe and Ivan Duque.

“My continuity in the government would make it difficult to quickly and efficiently build the necessary consensus, — Álberto Carrasquilla in his renunciation.

A familiar face takes over

President Duque immediately named current Minister of Commerce, Industry & Trade (MinCIT), José Manuel Restrepo as the new head of Colombia’s finance ministry, MinHacienda. Restrepo has been a longtime fixture of the Duque administration, working on trade deals, exports, and tourism promotion, though he is a well-credentialed economist. Restrepo in the past was a teacher in the faculties of Economics, Jurisprudence, Business Administration and in the postgraduate course in Finance at Colombia’s Universidad del Rosario and has authored a significant number of dissertations and academic articles.

Restrepo holds an undergraduate degree in economics from the same university and holds a master’s degree in Economics from the London School of Economics, Senior Management from INALDE Business School and a PhD in Management of Institutions of Higher Education from the University of Bath.

Despite the strong academic credentials, Restrepo faces a gargantuan task. As the new finance minister late into the term of an unpopular president, he now must figure out how to design a tax reform that can actually shore up Colombia’s fiscal deficits and manage the company’s debt while gaining approval from large swaths of the populace that are prone to oppose anything the Duque administration puts forward. Colombia’s debt rating is in peril, and the administration has little to no remaining political capital to spend on grand initiatives.

Restrepo speaks

José Manuel Restrepo, Colombia’s Minister of Commerce, Industry & Tourism

José Manuel Restrepo immediately took to the airwaves to outline what he hopes to accomplish. In an interview with the Caracol broadcasting network in Colombia, Restrepo said that any fiscal reform package he presents would stand upon three pillars:

1. To benefit Colombians suffering from the Pandemic: “That we are absolutely aware of so many people who were affected as a result of the impact of a pandemic…young people who do not have the possibility of an employment relationship, all those vulnerable people who need that basic emergency income, the micro and small entrepreneurs who need a break and tax relief and payroll subsidies for an additional time, women over 40 who lost their jobs.”
2. Send a message to the international markets that Colombia will guarantee stability in its public finances and fiscal responsibilities: Colombia is rapidly losing investor confidence and is in danger of losing its investment grade debt rating. Should that happen, the country’s government and public would face dire monetary and fiscal consequences.
3. Restart the economy to begin to undo the damage caused by COVID-19 health measures and pandemic lockdowns, the contraction in national GDP, and dearth in tax revenues and mineral royalties. In his previous role, Restrepo oversaw Colombia’s foreign investment promotion efforts and tourism initiatives.