Overnight we had the latest real sector data from Departamento Administrativo Nacional de Estadística – DANE Colombia which read well.

The manufacturing production numbers, despite the tidy GDP growth, have been spotty, but in May there was a 3% increase (above 2% estimates) in real terms, with sales (2.6%) & employment (0.3%) also showing improvement. However, despite 25 of the 39 sectors being in positive territory, it’s a little early to claim victory – only last month, there was a 3.3% overall decline. For the record, the main drivers were food, clothing, and chemical manufacture.

As expected in Colombia’s consumer driven economy, there was another big retail sales (13.2%) increase driven by vehicles (+29.8%), information/technology (+56.6%), & food (+6%). This all reads well, except for the fact that scanning through the categories, so much is imported. With exports still in the doldrums, expect ongoing deficit problems.

Interestingly, the main economic press concentrated on industrial production which dropped 0.2% – no mention of the other data points – any wonder they get criticized by the government for misrepresenting the economy !

Whilst the diplomatic & trade dispute rumbles on with no fresh news, Donald Trump & Gustavo Petro find themselves continuing as strange bedfellows with Petro again this weekend, aiming at Banco de la República – Colombia and what he perceives as their stubbornness over rates, which remain at 9.25%. Trump has the same attitude toward the FOMC. Whilst 2025 has seen slower-than-expected growth in Colombia, the reality is that overnight rates should have come down far more in 2024, and allegations of politics at play are hard to ignore. This month we should see a reduction to 9%, from there hopefully we’ll see rates at or below 8.5% by the end of the year.

Over the past few weeks, there have been a growing number of headlines related to the growth in agriculture, record revenues, exports, etc., which was one of Petro’s stated aims when he came to office. Why is there so much surprise? Colombia has arguably the best growing climate in the world, and it is also a country where only 4 million of an estimated 32 million farmable hectares are in use, so there is huge upside potential. The fly in the ointment, of course, are the mega-rich robber barons who prefer to use their farms for their purebred horses and infinity pools, as opposed to contributing to the future of the country.

Those are the main points this Wednesday, but where we haven’t heard anything significant for the past week is pension reform, tax reform, referendums, decrees, or national assemblies. There has, of course, been plenty of hot air amongst the runners and riders in the 2026 presidential derby – but there is no need to give them airtime.

Have a great rest of the week.

Roops.

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Departamento Administrativo Nacional de Estadística – DANE Colombia office in Cúcuta. Photo credit: EEIM/Wikipedia.

The big economic headline was Q4 GDP from Departamento Administrativo Nacional de Estadística — DANE Colombia, which was at (2.3%) to the top of expectations, according to Fedesarrollo. That is a 0.6% increase QoQ. The biggest contributions were from commerce/transport (+4.4%), public sector (+4%) and agriculture (+6.5%). The underperformance was from mining which dropped 5.9% driven by weak coal numbers. This brought us to a full-year GDP growth of 1.7%—very much as expected by the same analysts who are predicting 2.6% for 2025 which would be a solid number.

Elsewhere, Ecopetrol announced its latest reserve data. Oil now stands at 7.6 years (little changed) whilst there was a drop to 6.7 years for gas—combining the two there was a marginal increase when compared to 2023. Finally, total production of oil or equivalent rose to 250 million barrels in 2024—the highest in 9 years. The sector is in flux and work needs to be done, but still not the disaster often reported.

More chaos with the pension reform, as the constitutional court received 57 lawsuits against the government. All this does is jam up the court and stop the sector from getting on with life. Amidst all this chaos, the Peso has had a decent week thus far ($4098) and remains one of the best-performing currencies in 2025—albeit off a low base.

Have a great day.

Roops.

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Headline Image Credit: hangela from Pixabay.

Law 2381 introduces a “pillar system” for organizing contributors based on factors like age, weeks of contributions, and economic capacity to support the system. However, the law also mandates that employers will be accountable for social security contributions for all service contractors, adding a new compliance layer for companies that rely on this workforce model.

Current System and Upcoming Changes

As it stands, Colombia’s pension system operates under Law 100 of 1993, which requires independent contractors with service contracts to pay their own social security contributions. Typically, contractors receive their full fees from clients, without deductions for social security, making them solely responsible for contributions through the Planilla Integrada de Liquidación de Aportes (PILA).

This framework is set to change with the passage of Law 2381, particularly Article 7. “Under the new law, companies will need to manage not only their employees’ social security contributions but also those of service contractors. Companies must withhold a portion of the agreed contractor fees to cover health and pension contributions,” explained Andrés Romero, an associate at law firm Godoy Córdoba. For contractors who opt for voluntary pension contributions, employers will need written authorization to deduct these additional amounts.

Responsibilities for Employers

Under the new rules, businesses must withhold the necessary contribution amounts from contractor payments, ensure timely remittance of these funds, and keep contractor data up to date. Even if deductions are not made, companies will remain liable for the full contribution amount. Employers must also provide contractors with information about their chosen pension fund options and respect their selections. Additionally, they are required to report employment updates to the relevant social security institutions, including any benefits or entitlements.

For companies, this change increases administrative obligations by adding a formalized process for withholding and paying social security contributions on behalf of service contractors.

Challenges for Businesses

The new policy introduces a heavier administrative load on employers, sparking concerns within the business sector. The administrative and financial implications may be substantial, particularly for small and medium-sized enterprises with limited resources to handle the added workload. Many business representatives have voiced concerns that these requirements could increase operational costs and affect long-term viability, given the additional overhead for compliance.

The reform has reignited debate on balancing pension reforms with business needs, as companies argue for policies that consider their operational capacities and financial sustainability. While policymakers seek to improve social security coverage and reduce evasion, businesses are advocating for a balance that minimizes added burdens on employers and allows them to remain financially stable in the face of new non-operational costs.

As the law takes effect in 2025, companies across Colombia will need to prepare for these changes, potentially reshaping the country’s labor and pension landscape.

They are not the first company to do so amid claims by the private sector of underfunding from the government.

Above all, what we are experiencing is Colombia 2024 “101” — political polarization that is promising to bring the country to a halt.

There is an absolute mass to unpack here.

1. Historically, the EPS system (which Sura EPS is attempting to withdraw from) has provided coverage to over 90% of the population — and it has been widely praised over the years.

2. But the EPS providers are all up to their eyeballs in debt and have been for years.

3. Corruption and fraud have been seen across the system — and billions of dollars have disappeared over the years.

4. The minute that the EPSs have been stress-tested and questioned, they have bailed out. Ask yourself why.

4. President Gustavo Petro’s health reform tried to address these factors — but failed, as it sought too many other broad-reaching changes as well.

5. Congressional resistance was also driven by the lobby from those capitalizing from the fraud (as always).

To add all this, former President Álvaro Uribe’s party, the Democratic Center, is now looking to the courts to block ALL of the Petro reform processes — this at a moment when the pension reform is threatening to be passed. On top of this, Petro, in a country now awash with “fake news,” has had to deny that he wishes to close the Congress. Uribe’s move has nothing to do with the reforms but more the ongoing criminal investigation into his time in power.

That’s where we are right now in Colombia. Such is the political heat/stupidity/stubbornness/nonsense (insert more terms as appropriate) right now. The news of Sura’s withdrawal from the EPS system broke on Tuesday — and was already missing from the headlines by Thursday.

Perhaps if Petro and Uribe, the absolute pantomime villains of the piece, were dispatched on the next rover trip to Mars, Colombia might be able to get on with building a future.

Meantime, of more concern is a slowing economy, which has led to a 10.3% decline in tax revenues over the first four months of 2024. The current shortfall is around $2.85 billion USD. That is a huge chunk of change for a government that is being asked to ramp up payments to the health system, as well as other infrastructure projects.

All this with ratings agencies and other overseas entities urging cautious spending amidst positive comments on Petro’s attempts to balance the books.

For now, that is your rundown! Be grateful if you are overseas reading about Colombia, and not living it.

If I had hair, it would be falling out!

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In another shift: El Niño who? The little boy has almost been forgotten already. Yesterday’s news. Reservoir levels, according to XM, are still only at 39.5%, but that is a long way above the 27% critical threshold seen previously, and all eyes are now on La Niña.

When it rains in Colombia, it really rains.

When pushed by colleagues about “rainy London,” I discovered that even in a normal weather pattern, Medellín receives 6x the rainfall of London. La Niña is a whole new level.

From Fedesarrollo, we saw data this week for an April improvement in retail confidence (15.3%) while industrial confidence (-3.4%) was little changed month-over-month. For choice, there was a better beat to the future outlook while both numbers were well up on April 2023. Last week we also saw a modest increase in consumer confidence (-11.4%) from the -13% in March. These numbers continue to move around month to month.

From the National Administrative Department of Statistics (DANE), we had the latest import data (March) and there was another decline of 18.8% to $4.8 billion USD. Across the board — from agriculture to manufactured goods to raw materials — there were sizable declines. And despite exports also struggling in March, the trade deficit improved to $686 billion US versus just over $1 billion USD 12 months ago. Again, this is a reflection of declining domestic demand.

READ MORE: Petro’s Reform Plans Stagnate as Colombia Sits at an Impasse

Ecopetrol was also in the news this week. Moody’s Ratings lowered its rating from ba3 to b1 and raised the outlook from negative to stable due to the increased debt requirements and cash flow situation. Reserves were also a slight concern. Also, Finance Minister Ricardo Bonilla made mention of increasing production to 1 million bpd — which would be a 30% increase from where we are today. We have heard this for years, since the days of former President Iván Duque and ex-Ecopetrol head Felipe Bayon, and it still seems fanciful. It would be most welcome news but Colombia, no doubt, but for several years now, the industry simply isn’t coming up with the new reserves it would require and needs to move on from the obsession with oil.

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Once again, we are seeing the lack of a Colombian collective with everyone in it for themselves.

Photo: Colombian President Gustavo Petro (Credit: gustavopetro.com.co)

Petro is neither a pariah nor messiah. It is hard to argue against the need for change surrounding many of things he is trying to change, but his methodology has only further antagonized a ruling elite, who are opposed to changing the world order.

Remarkably, there are elements of Colombian society who seem comfortable with 3% of the population suffering from malnutrition, systemic corruption, and a constitution that fails to enshrine education as a citizen’s rights.

In terms of all the main reforms Petro has proposed — education, pension, labor, and health — changes are clearly needed. Yes, there is a need for debating and fine tuning the details, but in the end there are too many people with skin in the game to ever allow wholesale changes. Beyond that, trying to change the world in four years, was never going to work.

The economy is struggling — but not just because of confidence around Petro. A hostile Banco de la República has been almost negligent in reducing rates too slowly and not allowing the economy to breath. The private sector (in the shape of ANDI, FENALCO, and Asobancaria) has all said the same. The fact that Petro doesn’t inspire confidence, however, is a contributing factor.

Ratings agencies are demanding Petro balance the books — but then he is criticized locally for not easing the purse strings.

Finance Minister Ricardo Bonilla has mentioned increasing the debt level to inject money into the economy — but then he takes a beating.

Already, everyone is eyeing the 2026 elections, so it is hard to get anything done without favors — marmalade as they call it here —  being called in. Alliances continue to shift around.

The country has arrived at a frustrating, irritating, and — frankly — boring moment. Additionally, the politicians are up to their usual game: “If you in investigate me, I will investigate you.”

I’d like to say this will all blow over soon. But to the Colombian elite, Petro represents, in their mind’s eye, an existential threat. And they are fighting hard to retain the power they have.

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If Brent oil prices spike due to concerns over oil supply, then logically the Colombian peso should shift back down below 3,800 to the US dollar once again. If the concerns over an escalation increase, however, then we may see a flight to dollars and the peso may come under pressure.

This won’t be a question for today, but for the coming days — and even weeks — depending on how the story develops. Thus far, the reaction appears calmer than expected.

But the situation is still in development mode.

On the weather front, El Niño front may have abated somewhat, with April opening with a deluge of rain. But there are still huge concerns over the lingering effects and some of the mixed messaging over recent weeks.

Predicting the weather in a country such as Colombia is impossible due to its proximity to the equator, two oceans and the fact that it is covered with mountains. The authorities, IDEAM Colombia made it clear that the country would take time to normalize — and that has proven the case.

Bogotá is suffering from water rationing, reservoirs have dropped to record lows, and there are concerns again about energy shortages.

On Saturday reservoirs hit a record low of 29.96%, and the government has stated that 27% would be a critical level. The energy minister is urging the country’s thermal generators to work full throttle in order to guarantee that we don’t suffer from electricity outages. XM had urged caution last week in terms of consumption — although, unfortunately, only a few weeks ago they were telling us there would be no outages. Now, the tone has changed somewhat.

Finally, politics is never far away in Colombia, with President Gustavo Petro and the congressional president still at loggerheads due to the collapse of the health reform.

While we await further developments regarding the pension reform, where the opposition parties have refused to attend, Petro should be on safer ground with education reform.

In reality, this is perhaps where he should have concentrated his efforts since 2022. While all these areas need some sort of reform , it is education where the need is most critical.

Remarkably, for a country that has ambitions of grandeur, education in Colombia is not a right. It depends largely on where you are born — and to who. Those days need to be condemned to the past and, hopefully, by the time Petro leaves office, he will have committed huge recourse to the problem.

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• Why did the US release one of Colombia’s 10 most wanted criminals after he crossed the border illegally from México into Texas?
• President Gustavo Petro’s frustration is reaching the boiling point as his “revolutions” fail and he calls for a constituent assembly (constitutional convention).
• JetSmart launches domestic operations in Colombia
• Luz Adriana Camargo is the new attorney general
• Federico Gutierrez submits 501 corruption allegations implicating the Daniel Quintero administration to prosecutors and inspector general’s office.
• Ecopetrol is facing a corporate governance crisis. Petro has said he wants to end fossil fuels. Does he want to end Ecopetrol?

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There will be a number of things to look out for within the various sectors such, as the impact of El Niño on energy prices and transport costs related to fuel. Overall, however, the expectation is for a headline number that will allow Banco de la República to take affirmative action when they next sit down. Finance Minister Ricardo Bonilla is asking for a 1% cut (down to 11.75%), but given strict orthodox conservative nature of the committee, he may have to settle for less.

The other major macro number that will be released by from the National Administrative Department of Statistics (DANE) is the export data for January. While 2023 was a disappointment for overseas sales, hopefully 2024 will go better.

Ecopetrol’s latest results (released last week) — and the company’s offshore gas update previous to that — have brought the sector into the headlines once again.

While oil production in 2023 hit an eight-year high (on the watch of anti-fossil-fuel President Gustavo Petro), the reality is that Colombia needs to realize that it isn’t Saudi Arabia or even Venezuela. The oil boom is now behind us, and while there is still oil to be found, companies are now comparatively scratching around. The oil field auctions under the administration of former President Iván Duque told us as much, with only lukewarm interest in the offering.

When it comes to gas, there is a lot of talk about — in terms of both possible discoveries and reserves, Ecopetrol dialed back somewhat on its Orca-Norte field information. And, again, there are no guarantees. Adding to the issues are the damage to the pipeline, reported by Natugas, that is to be used to import cheap gas from Venezuela.

Ecopetrol has been a dividend cash cow for many years, which has helped the Colombian government, but those days are surely coming to an end. While the company has offshore interests in multiple locations around South and Central America, the reality is that the political minefield of Venezuela — with its need for overseas help — may represent the final frontier for the Colombian oil industry.

In politics, the Senate will try once again try and discuss the pension reform. Hopefully this time there will be a quorum. The opposition’s attempt to derail the process will only result in two things: (1) reforms being imposed by decree, which is utterly unsatisfactory, and (2) continued questions regarding the Colombian political class — and their being fit for purpose.

Ecopetrol headquarters in Bogotá, Colombia (Credit: Dvalencia)

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Now let’s watch that theory disappear out of a 20th floor window!

On the macro side, things are very calm. There are some construction cost numbers due on Friday from the National Administrative Department of Statistics (DANE) as well as the latest Bloomberg opinion survey. But the needle won’t move much. We also will get Fedesarrollo‘s retail and industrial confidence data for June, and that will be interesting after another much-better-than-expected reading for consumer confidence.

First, because the reforms are likely to end up more watery than your average US beer. And, secondly, because the economy is ticking along nicely and 4,000-4,200 looks a comfortable level. Finally, much of the impulse is coming from favorable US inflation data.

For me, along with many others from the chilly Islands of the UK, improved weather was a benefit of moving to Colombia. But even though El Niño is still two months away, things are starting to get a little toasty. We are not alone in the world, but unlike most of Europe, the resources to combat a long-term drought are simply not there.

Finally, for those who like their news a little more salty/edgy, ex-paramilitary leader Salvatore Mancuso, who spent a decade in a US prison for his crimes, has reportedly been asked by Petro to act as a coordinator for the peace process.

If true this might prove uncomfortable for some.

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