Those resources are not coming from commodities. Despite oil production having increased since the days of Duque/Bayon, July exports from Departamento Administrativo Nacional de Estadística – DANE Colombia were again down 4.1% with commodities (-25%) and oil (17%) both lower.

There were some sensationalist headlines (Bloomberg around how much tax the rich will pay under the new reform however, it is far more nuanced than that. Consumption accounts for around 27% (of the $6 billion USD), but there are areas of pure common sense within that. Alcohol & tobacco are two areas proposed, as well as VAT on international tourists. Where the rich may get more nervous is that 24% of the reform is geared towards lowering evasion – Colombians are experts at hiding their funds overseas and/or hiring brilliant accountants. Other areas targeted are mining/energy (3%), gambling (6%), & fuel (10%).

It’s a many-headed snake, but just as Perseus took care of Medusa back in Greece, the Colombian Congress will take a sword to the tax reform, as well as the 2026 budget – much of the media debate will prove redundant. Let’s see what is left in a few weeks.

In terms of the overall fiscal picture, made worse every month by the above exports and booming domestic demand, plenty are saying that the key is to reduce government spending by 3-4%/GDP, which seems sensible. But is that in education, the fight against poverty, or perhaps by simply suspending some massive public infrastructure projects?. Whatever Gustavo Petro does, the ANDI – Asociación Nacional de Empresarios de Colombia and its peanut gallery members will still be moaning.

Was it a sailboat or a speedboat? Was it carrying drugs? Did the US act legally? Was it dispatched by Nicolás Maduro? Will Donald Trump continue to punch downwards until he finds a country that doesn’t bite back? Is Petro correct to speak of caution, given that Colombia shares a 4000 km land border with Venezuela? Simply a rabbit hole I’m going to avoid.

There was news elsewhere in brief.

The current account deficit widened to 2.5%/GDP in Q2.

Vehicle sales in August hit 21,285, up 29% YoY.

The Colombian birthrate fell again in 2024 by 13.7% – no extinction fear yet, but growth is slowing.

A lumpy Friday to say the least!

Regards.

Roops.

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Roulette wheel. Photo credit: stux from Pixabay.

The tax reform ($4.5 billion USD) is due to be presented (dens of iniquity such as gambling, tobacco, alcohol, and the church are included) and will form an important component of the $149 billion USD total budget, albeit that the opposition is looking to trim it by over $10 billion USD, including the tax reform component. In short, the environment is hostile. The budget is seen as excessive by many, but of course, that depends on your political ideology. Those in government are looking to improve the lives of millions in Colombia who are the forgotten class, Orwell’s proletariat if you like, and that isn’t cheap. One problem, of course, is money; Colombia doesn’t have enough of it. The other is the March legislative elections, which means that the current congress is not going to vote for Christmas.

Taxes are an ongoing theme. Whilst they are set to hit a record collection of $70 billion USD, up 15% YoY, that is still almost $5 billion USD below the budget, and therein lies the problem. The DIAN is still working on thousands of overdue payments, and we are already discussing the 2026 reform. For those wondering why Gustavo Petro is undertaking a second tax reform, both Iván Duque and Juan Manuel Santos did the same.

For those at the back who are still wondering why, the Colombian tax system is broken. It doesn’t work, is open to abuse, is unfair, and invites evasion, especially by the elite.

Asobancaria was upstanding this week and also discussed the deficit issues, but they also emphasized four positive aspects of the economy. Lower inflation, which hits 4%, will trigger lower rates. Higher confidence—this week, Fedesarrollo reported improved industrial and retail levels for July to accompany the already reported consumer data. Lower unemployment and gradually improving investment levels.

Finally, are we seeing an oil romance? Canacol Energy Ltd has been the last Canadian standing for many a year; few understand why it wasn’t snapped up much earlier, given its natural gas assets. But the press is reporting that Ecopetrol is flirting with Canacol, whose stock price erupted on Thursday – whether it is a JV or equity purchase, I hope my old chum Charles drives a fearsome bargain after so many years supporting Colombia.

Have a wonderful Friday.

My regards.

Roops.

Never miss Rupert’s latest commentary.
Follow him now on LinkedIn to see What Jumps Out.

Capitolio Nacional (Photo: Oficina de Información y Prensa Cámara de Representantes)

“The memories I still have fresh of certain episodes—of which I was a direct witness—continue to cause me unease and dismay,” wrote Leyva in his letter, who served as the eldest member of Petro’s original cabinet as Foreign Minister. He was referencing a state visit to France in June 2023, where Petro allegedly “disappeared for two days,” delaying the delegation’s return.

Leyva added, “It was in Paris where I was able to confirm that you had a problem with drug addiction. But what could I do? Surely, I was not up to the task. I should have reached out, helped, intervened. I carry the regret of not having tried to lend a hand. The truth is, you never recovered. That is the reality.”

While the accusations were met with skepticism by Petro’s allies, the President himself responded on X, but without naming Leyva directly. “Now it’s a sin to be with my family. Because several of my children and my mother live abroad, and because of the persecution we suffer, I have very few opportunities to see them,” he wrote hours later. The following day, during a public appearance, Petro mocked the allegations: “Being a drug addict is not a sin, Mr. Oligarch. Most of your children are addicted—if not to drugs, then to money. It’s a treatable disease, but never blame that illness on a revolutionary who has spent his entire life trying to make his dream revolution come true,” he said in a speech lasting more than an hour.

Leyva, now 82, began Petro’s administration in 2022 as a key figure in the President’s peace-building agenda. Under his leadership, Colombia reestablished diplomatic relations with Venezuela and Cuba, making them key guarantors in peace talks with the ELN and FARC dissident groups. However, in 2023, Leyva was accused of unlawfully annulling a tender process for the issuance of passports—a decision that ultimately led to a ten-year public service ban imposed in November 2024. The ruling found that Leyva had canceled the bidding process despite the company Thomas Greg & Sons (TGS) meeting all legal requirements.

Days later, Armando Benedetti publicly admitted to his own addiction struggles. In two extensive interviews with online magazine Cambio and national daily El Tiempo, Benedetti revealed he had been addicted to cocaine and alcohol and had undergone rehabilitation in Mexico. “Last October, I spent 35 days in a rehabilitation center in Mazatlán, Mexico, and there I overcame the emotional instabilities that lead one to use drugs. And that helps free oneself from many of the situations that lead to use. Based on that, with rehabilitation, you become more spiritual. You understand that you have to ask for help and that you can’t get out of there alone,” he told El Tiempo.

“Sometimes it’s hard to accept. I don’t want to be a drug addict. But I am. It’s a disease, and I wish I was not (…), 90 % of my problems are due to arrogance,” he told Cambio. However, he firmly denied Leyva’s claims about Petro.

Benedetti is currently under judicial investigation for gender-based violence, illicit enrichment, and alleged physical aggression—charges filed in 2023 by current Foreign Minister Laura Sarabia, after leaked audio revealed him using offensive language against her during a past dispute.

These two revelations have reignited debate over personal conduct in public office and the boundaries between political loyalty, accountability, and privacy. But it has also raised concerns about the health of those whom have the Colombian government in their hands.

Headline photo: Armando Benedetti, Minister of the Interior of Colombia since February (Photo: Ministerio del Interior)

July inflation from Departamento Administrativo Nacional de Estadística – DANE Colombia registered 0.20% (2023 0.50%) bringing us to a YTD reading of 4.32% (6.68%) and a 12 month figure of 6.86% (11.78%). That is pleasingly below the 6.96% predicted and with the exception of housing there was precious little to worry about. That sector rose 0.45% MoM and contributed 70% of the inflation in the system. Food rose 0.21% and added in most of the balance. Amongst the other sectors surveyed there was little to make mention of but Restaurants/Hotels & Cigarettes and Alcohol also rose 0.33% & 0.22% respectively which means Colombians are still insistent on enjoying themselves.

I would normally speculate as to what the Banco de la República – Colombia might do at their next meeting but it’s not worth it. In August they don’t have a ‘decision’ meeting and by the time they meet in September we will have had the August inflation number. Remember if they are to get to Fedesarrollo‘s 8.50% analyst estimate they will need to cut by 75 bps average at the three remaining ‘decision’ meetings of 2024. Good luck with that.

Venezuela is still on many people’s minds but there has been little to report this week, mainly because Maduro has been cutting communications links. Yesterday he shut down ‘X’ due to Elon Musk’s comments. Colombia and many other countries have asked for human rights to be respected but that will likely fall on deaf ears – it’s an internal sovereign matter in the eyes of international law and there seems little to be done. My only surprise is to find people seemingly shocked at Maduro’s actions. He isn’t fighting for his presidency, he is in all likelihood fighting for his life.

Wednesday’s holiday marked the two year anniversary of Gustavo Petro in office and was marked according to the defense minister, during his periodical update on criminality in Colombia, by intelligence pointing to an assassination plot against Gustavo Petro. No further details were offered as to when or where this was planned but nonetheless concerning.

That is it for this morning however, you do not escape that lightly. Please keep a look out for ‘The Petro Prism’ my very brief look at the first two years of the current presidency.

Have a great end to the week

Roops

Above photo: The Puente de Boyacá or Boyacá Bridge over the Teatinos River commemorates the “Battle of Boyacá,”a key event in Colombia’s independence from Spain (photo: Loren Moss)

These numbers are inconclusive and will have the Central Bank wondering what to do in three weeks time. Analysts are expecting a 13.25% terminal rate between March and April but have we topped out on inflation? Having increased rates by less than expected last time to 12.75% perhaps the committee will once again opt for a more dovish outlook?

This week is extremely light on macro data. We have export numbers for January with analysts expecting US$4.15bn which would be well up on the US$3.8bn a year ago but well down on the US$4.49bn of December. The key will be the breakdown of the numbers, not just FOB but also the tonnage – both areas were propped up by coal sales over the past couple of months.

Many of the headlines this week will revolve around President Petro. The various reforms continue to be rolled out but despite the headlines Congress is likely, as per the tax reform, to strip back what the President is looking to do. The state council also blocked his plans to control the energy sector for the next three months.

The absolutely key takeaway from these developments is the fact that the institutions of Colombia are holding very firm. Presidents come and go in Colombia but unlike other countries around the region, there are a lot of checks and balances on what any administration wants to do after being elected.

Finally on the markets we had data last week that foreigners were Net Sellers of TES bonds in February – a total of US$878mn – that is lumpy and will have had an effect on the Peso. Speaking of which, it held up fairly well last week although China’s modest growth plans may have an indirect impact if oil slips.

Wishing you all a good week

Roops

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Seven guards of the National Penitentiary and Prison Institute (Instituto Nacional Penitenciario y Carcelario – INPEC) were charged with allegedly running a clandestine delivery service within the Tramacúa Prison in the northeastern Valledupar department, prosecutors announced.

This article generously shared by Insight Crime. The original can be read here.

The INPEC guards were said to have acquired a drone to deliver drugs, cellphones, electronics, alcohol and food to inmates at the maximum and medium-security prison.

The contraband goods came at a hefty mark-up. A hamburger delivery reportedly cost around $64 and an order of fried rice set prisoners back an eye-watering $100; alcohol around $255; a delivery of marijuana cost around $385; and sim cards went for $515.

According to the Attorney General’s Office, the prison deliveries generated an income of just under $9,000 per month, which was divided among the seven guards.

The operation was reportedly discovered following a mistaken delivery, in which the drone laden with 18 cellphones landed where it was not supposed to. The INPEC guards are now behind bars themselves.

InSight Crime Analysis

The use of drones to smuggle contraband into prisons has become commonplace across Latin America and around the world.

Cases have been reported across Latin America and internationally. In addition to Colombia, cases have been reported in Ecuador, Chile and Puerto Rico, as well as in the United States and Canada.

The use of drones by prison guards to deliver contraband sets a rarer precedent. However, INPEC, Colombia’s national prison system, has faced numerous corruption scandals in recent years. Officials have been known to charge inmates for perks, accept bribes and extort inmates.

Poorly paid prison guards, who make on average $208 to $625 per month, are easy targets for inmates looking to smuggle contraband into the prison and to flaunt prison rules.

In an interview with El Tiempo in 2019, Elkin Cárdenas, an INPEC employee for more than 20 years, rattled off a list of contributing factors, including a poor selection process, the young age and inexperience of recruits who can be hired at 18 years old, and long work hours. Up until 2021, prison guards could be on shift for up to 24 hours straight, but a decree passed last April limited shifts to 12 hours and a total of 44 hours a week.

This article generously shared by Insight Crime. The original can be read here.

Headline photo:A joint tactical autonomous air resupply systems (JTAARS) carries a small package during the Maneuver Fires Integrated Experiment (MFIX) at Fort Sill in the United States, April 12. The JTAARS experimented with the possibility to use unmanned aerial vehicles, autonomously… (Photo Credit: U.S. Army) Used for illustrative purposes.

Among other measures, the president explicitly ordered telework modalities for all businesses and government agencies where possible. This would exclude persons who cannot perform their duties remotely such as nurses, retail cashiers, construction workers, etc.

Article 6 of Decree 749 of 2020 states: Telework and work from home. During the duration of the sanitary emergency caused by the Coronavirus COVID-19 Pandemic, public and private sector entities will procure that their employees and contractors whose presence is not indispensable in the workplace, to perform their functions and obligations under the modalities of telework, work-from-home, or other similar.

The wide-ranging order also mandates biosafety protocols for those who much be in the workplace or conducting personal activities in public. Public gatherings remain prohibited, and casinos, bars, dance halls, and other “establishments of dance, leisure and entertainment” remain closed.

Restaurants may only serve carryout or delivery, gyms, pools, spas, and sports courts remain closed as do cinemas, theaters, and churches. Parks may be used on a limited, individual basis, but group outdoor activities remain prohibited. Public consumption of alcohol is prohibited but alcohol sales for in-home consumption are permitted.

According to Colombian authorities with the Ministry of Commerce, Industry & Tourism (MinCIT), their investigation demonstrated that of the total corn subsidies paid by the US government, 68.7% went towards the production of ethanol, amounting to $0.06646 USD per kilogram subsidy. Compared to the price of the last declared importation of the alcohol, that represents an ad valorem tariff of 13.2%.

The ministry stated that a causal relationship was found between the increase in these external purchases from the United states and negative performance of domestic producers because of these subsidies. The 15 month investigation was started at the urging of the trade group Fedebiocombustibles which represents domestic producers.

According to MinCIT, the process complied with the World Trade Organization Agreement on Subsidies, and was open to participation by the US government, exporters, and labor unions.

Image by Franz W. from Pixabay

Colombia’s Minister of Commerce, Industry and Tourism José Manuel Restrepo, explained that as there has been a high demand for these products that are required domestically for attending Colombian patients, the measures are taken to ensure supply.

“We are going through a health situation that leads us to adopt different measures to contain this pandemic, and the restriction on the export of these products is one of those measures that is also allowed by the World Trade Organization, of which we are part. This body allows exceptional, temporary restrictions on exports to prevent or control the shortage of products, in this case essential for health,” said the minister.

The regulation, Decree 462 of March 22, 2020 also establishes that both producers and importers of these goods must prioritize their distribution to the following beneficiaries:

• Health Service Provider Institutions that have a neonatal, pediatric or adult or hospitalization, adult or pediatric or emergency intensive or intermediate care unit and those authorized by the Ministry of Health and Social Protection
• Urban mass transport companies
• Airlines and ground transport companies
• Airports and transport terminals
• Government, national, departmental and municipal entities
• State security forces, fire and civil defense
• Delivery companies and direct-to-home marketers. These companies will limit the retail sale of these products to two units per household, per week.
• Drugstores, department stores and retail marketers, as long as the sale is limited to two units per family group per week.
• Legal persons and companies, authorized by the government, provided that the sale is limited to the units necessary to attend to the number of employees or personnel necessary for their operation, for a week.

The rule also states that in the case of older adults, the purchase of products in commercial establishments at home and in drugstores may be made by a family member or the person who cares for him.

The Decree restricts the export or re-export of goods such as latex medical gloves, protective glasses, electrocardiographs, vital sign monitors, neonatal cribs, ventilators, respiratory devices and respiratory protection masks, X-ray equipment and beds. and hospital stretchers. Also, alcohol, soap, toilet paper, gloves for medical or care use, other medicines for human use, disinfectants, damp cloths and towels, antibacterial gel, face masks of various types and medical equipment of various types are some of the goods that may not be exported during the next 6 months.

Monthly, the Ministry of Commerce, Industry and Tourism will review the supply of the 24 products contemplated in the decree, and if it determines that there are sufficient stocks to serve the national market, and if there are surpluses, it may authorize export at the request of interested merchants or producers.

Image by Christian Slater from Pixabay

Because the Colombian National Team will play two matches in Russia that start at 7 am and 9 am local time, the Colombian Association of Bars (Asobares) had asked the city to lift its prohibition on establishments selling alcohol before 10 am.

But the office of Mayor Enrique Peñalosa this week announced that it would not change its regulations, disappointing both those looking to make some extra revenue during the competition and those who wish to enjoy cerveza or aguardiente while they cheer on their team.

This was not an issue during the last World Cup in Brazil, where Colombia qualified for the first time in 16 years, because the nations’ similar time zones meant games were played in the afternoon and evening. But some games being played in Russia start as early as 5 am on Colombian time.

“Honestly, that’s not the society that we want, where people start drinking at 7 in the morning,” said Peñalosa in a statement. “This ends up causing disorder, fights, violence, and even homicides. So we do not approve the request.”

The mayor’s office did note that bars, restaurants, and other establishments are welcome to open their doors as early as they like to host World Cup fans. But alcohol sales cannot start until 10 am in line with the regulations that always apply throughout the capital.

Asobares received better news in Cucutá. The largest city on the Colombian border with Venezuela — and birthplace of Selección superstar James Rodríguez — has agreed to modify its restriction hours and allow alcohol sales in bars starting at 7 am for the entire month of the World Cup from June 14 to July 15.

Bogotá will celebrate the team’s games, however, by setting up a series of outdoor big-screen televisions throughout the city on game day. The screens measure five meters by fours meters and will be showing the three Colombia group-stage games in a total of 12 different parks across the city.

Peñalosa will also ramp up the number of police officers in the streets during games to help ensure security and prevent issues related to the larger crowds that will be gathering across the city.

The first game against Japan, kicking off at 7 am on June 19, can be viewed in Parque Santander (in the neighborhood of Candelaria), Parque Cayetano Cañizares (Kennedy), and Parque El Virrey (Chapinero).

The most anticipated game comes against Poland, the other favorite to advance from Group H to the knockout round, will take place in the early afternoon, at 1 pm, on Sunday, June 24. This main event match will be shown in Parque Nacional (Santa Fe), Parque Tunal (Tunjuelito), Parque Chunizá (Usme), Parque Cedritos (Usaquén). Parque Bronx (Mártires), and Parque Tercer Milenio (Santa Fe).

The final group game pits Colombia against Senegal on June 28 at 9 am. It will be shown on big screens in Parque Los Hippies (Chapinero), Parque La Gaitana (Suba) and Parque Villa Luz (Engativá).