Traders and transport operators have suspended a 19-day blockade at the Rumichaca International Bridge, the primary land crossing between Colombia and Ecuador. The protest, catalyzed by a 50% tax imposed by the Ecuadorian government on Colombian goods, was lifted to accommodate travel and commerce during the Semana Santa holiday period. Despite the suspension of the strike, the regional business community reports that significant economic damage and diplomatic tensions persist.

Ecuador’s President Daniel Noboa (photo: Carlos Silva/Presidencia de la República)

The closure of the border crossing created a substantial disruption in binational economic activity. Estimates from the Cámara de Comercio de Ipiales in Nariño, Colombia indicate that losses reached approximately $5 million USD per day due to freight remaining stationary in the border zone. The Comité Gremial de Trabajadores de la Frontera de Ipiales stated that while the reopening is a responsible gesture for the high-traffic holiday season, current tariff policies continue to threaten hundreds of direct and indirect jobs linked to foreign trade.

The Governor of Nariño, Luis Alfonso Escobar, criticized the trade barriers implemented by the administration of Ecuadorian President Daniel Noboa. Governor Escobar argued that such measures inadvertently encourage illicit activities in the region. He emphasized that instead of facilitating formal commerce, high tariffs drive trade toward illegality, undermining regional security efforts. To mitigate the conflict, the Comunidad Andina de Naciones (CAN) has initiated high-level dialogues. Diplomatic delegations led by Colombian Deputy Minister of Foreign Affairs Juana Castro and her Ecuadorian counterpart, Alejandro Dávalos, held a virtual working group to address pending issues in trade, transport, energy, and hydrocarbons.

“Decisions adopted without considering the reality of our communities have put at risk the livelihood of merchants, transporters, foreign trade workers, and thousands of people who live from binational exchange,” stated the Comité Gremial de Trabajadores de la Frontera de Ipiales.

Diplomatic friction has extended into the energy sector. President Noboa claimed that in 2017, Ecuador assisted Colombia during a potential blackout by charging 1.6 cents USD per kWh, whereas in 2024, Colombia charged an average of 28 cents USD per kWh during Ecuador’s hydroelectric crisis. In response, the Colombian Minister of Mines and Energy, Edwin Palma, clarified that prices during the 2023-2024 El Niño phenomenon reflected the actual costs of production and distribution, particularly when fossil fuel-powered thermoelectric plants using fuel oil and diesel were activated.

The ongoing trade dispute has impacted more than 5,500 companies over the past two months. Diana Marcela Morales, the Colombian Minister of Commerce, Industry, and Tourism, confirmed scheduled meetings with Ecuadorian officials to de-escalate the conflict and establish fair, transparent rules. Concurrently, the Ministerio de Comercio, Industria y Turismo has moved to protect domestic industries by implementing new tariffs on steel and ceramics from countries without existing free trade agreements. These measures aim to counter market distortions and protect a sector that employs more than 50,000 people while promoting circular economy practices and reducing CO2 emissions.

Above photo: Border between Ecuador & Colombia looking towards Ipiales, Colombia (Photo: Cancillería de Colombia)

“This curfew will apply to the 125 municipalities of Antioquia in a generalized manner. It will start from March 21 and run until the Monday after Easter, April 5,” said Juarez. “”By last Monday we had 89.21% occupancy of ICU beds in the entire department of Antioquia, but in the Aburrá Valley the occupancy reached 94% and in eastern Antioquia 95%.”

This week, leading up to Easter, is normally the busiest travel week of the year for Colombians, as they take time off to visit family or vacation destinations.

Pico Y Cédula

Entrance to retail establishments is also restricted. Holders of even ID numbers may enter malls and stores on even dates, and the same for odd numbers, based on the last number of the holder’s cédula (Colombian national ID) or foreign passport.

Churches are allowed to open, and people who must travel during the evening, such as commutes from work are permitted. Travelers may also traverse distances at night, such as between cities, but must carry documentation proving their destination, such as hotel reservations or some sort of itinerary.

“The circulation by national roads is not prohibited. A person who leaves for Coveñas or Cartagena, for example, even at times where there are restrictions, can do so by showing that they are going to a national tourist destination,” said Suarez.

The governor admonished Paisas (people from Antioquia and the coffee region to the south) that indiscipline has led to the high rate of infection. “”The main measure is self-care, there is no doubt that we have lowered our guard, that we have neglected, that the virus is still present and today it is presenting a massive contagion that leads to greater occupation of ICU beds,” said Suarez.

According to the governor, Medellín has increased the number of ICU (hospital Intensive Care Unit) beds from 1,205 to 1,290. Las Monday, 1,442 new COVID cases were reported, with a historical total of 369,749 cases, 352,359 recoveries, 6,952 deaths, and 9,475 active infections.

Finance Colombia: Sergio, here in Colombia we are up to 31 deaths and 906 verified cases of COVID-19 (as of 4:12pm, 31 March 2020). So far, government measures seem to be followed by the general population, though we have seen some isolated cases of looting, and we are seeing a lot of potentially dangerous misinformation circulating through social media. How do you see the situation evolving as we go into April? Will the government be able to maintain calm and compliance?

Sergio Guzmán: Thanks Loren. I think the most important thing here is to recognize that nobody was prepared for the crisis we now find ourselves in. To a certain extent all the dynamics – good and bad – that we Colombians encounter on a daily basis have transferred to the virtual world. We see that fundamentally this is a public health crisis that will have serious economic repercussions, as it evolves, we will see that the economic malaise will drive political discontent due to the dire circumstances some people find themselves in. Depending on how the government manages this—and so far they have done what best they can—this can evolve into more widespread unrest as people begin to exhaust the meager savings they have and begin facing food shortages. The government has rolled out a subsidy program, which will be well received by those who already receive government subsidies, but will not necessarily reach those informal workers who need it most, this will be even more difficult for migrants and those living in rural areas.

Finance Colombia: We are coming up on Semana Santa, the week before Easter, which traditionally is the most important travel week of the year. It looks like this year it will be a complete write-off, and devastating for the domestic tourism sector, as well as for the dollars that the Colombian diaspora usually brings home at this time. Do you expect ripple effects from a security standpoint?

Sergio Guzmán: I think it is too early to tell from a security standpoint what exactly will happen and the ways in which this virus will change us as a society. First, I think it is important to highlight that the ELN just declared a unilateral ceasefire in response to the COVID-19 pandemic. Second, I think the dynamics of organized crime vary significantly from one region to another with some groups taking advantage of the virus to extend their territorial control in some parts such as Cauca, Catatumbo, Chocó and northeastern Antioquia. Third, cocaine trafficking will likely continue undeterred by the measures enacted by the government to face the pandemic. From the point of view of urban security, our forecast is that security risks will increase especially with regards to common and petty crime, particularly coming to the end of the quarantine period and its possible extensions.

Finance Colombia: The Duque administration was unpopular going into this. Politically speaking, will this pandemic strengthen or weaken his administration, with two years to go until election time?

Sergio Guzmán: At the beginning of the crisis, the central government and local governments showed a lack of coordination and embarked in political pettiness. I think it is important to highlight that local governments were inaugurated on January 1st, which means that we’re now at that 100-day mark when many local officials have to show their constituents who they are and how they intend to govern. However, as the crisis progresses, President Duque has seen his legitimacy increase as a result of the crisis. Going forward, we are likely to see more coordination and President Duque’s legacy will be judged by how the public interprets he managed this moment. That doesn’t mean that the opposition will allow the government to steamroll legislation any time soon – especially nothing that has to do with the implementation of the peace agreement – but that the government has earned itself some goodwill that if well-managed, can mean a great deal for Duque’s future.

Finance Colombia: Almost simultaneous with the COVID-19 Pandemic, a petroleum price war broke out between Saudi Arabia and Russia. In December President Duque pulled a billion dollars out of Ecopetrol, the state-controlled petroleum company. The plunge in petroleum prices, the correlated plunge in the Colombian Peso, this has to be devastating to the country’s fiscal condition and budget. Does this materially limit the room the government has to maneuver to face these crises?

Sergio Guzmán: Absolutely. Oil revenues account for 26% of government income, more than 60% of exports, and an important source of employment both in urban and rural areas. The government has usually relied on Ecopetrol as its main source of income and an important source of investment in rural areas, this will now be cut dry as Ecopetrol has been forced to cut its budget in a major way for 2020. Fiscally, the government started the year in a weak position, which has been now further weakened by the economic crisis worldwide. The passage of the Economic Growth Law, though heralded as positive for business, meant that the government would collect less taxes in 2020, and critically in 2021. The government expected to curb this shortfall with economic growth and welcoming environment for international investment that would attract money to the country. The crisis has turned that idea on its head. Further the government is constrained by the Fiscal Rule, which limits the amount of debt the government can take on.

Finance Colombia: Colombia still has an economy very dependent on things like retail, textiles, manufacturing. These aren’t things that can be done “work from home.”  How long can the business sector—and the employees, afford to stay shut down? Avianca was already teetering on a precipice before this crisis. Tecnoglass is in much better shape but still, completely shut down and gave everyone a vacation through Easter. I can only imagine how this is affecting tourism-dependent cities like Cartagena and Santa Marta.

Sergio Guzmán: Every single sector will be affected by the crisis. No doubt about it. The forecast for growth for Colombia has already fallen from 3% to -3%. I don’t think the business sector can hold on to current conditions for more than another quarter. In the current circumstances, cash is king, and the businesses who have cash in the bank will be able to weather the crisis better than those who do not. Public pressure is taking hold of employers who engage in layoffs or decree pay cuts to their employees, but there is growing pressure for people and businesses not to pay their debts. I don’t think this is likely to happen, but we do live in an age of moral hazard.

Finance Colombia: Tell us a little bit more about your consultancy, Colombia Risk Analysis. What does your firm do, and who are typical clients? When is it best for potential clients to reach out to you, and how can they get in contact with you?

Sergio Guzmán: Colombia Risk Analysis is a local political risk consultancy where we help companies and organizations understand the evolving circumstances and how it affects them allowing them to make better business decisions.  Our ability to produce research, reports and intelligence in both English and Spanish makes us an asset for both local and international clients who need actionable information and no-bullshit analysis. We work with companies in all types of sectors including mining, oil and gas, finance and insurance, transportation and manufacturing. Right now clients are figuring out the direction in which the virus is headed and how the government decisions will impact their bottom line, soon their concern will grow over issues such as security and social unrest.  Potential clients can reach out through our website (www.colombiariskanalysis.com) or over email (info@colombiariskanalysis.com). We have a great and active following on Twitter (@ColombiaRisk) and we are also present on LinkedIn.

Catalina Bretón, chief executive of Wingo. (Credit: Wingo)

In all, the carrier, which is controlled by Panama-based Copa Holdings S.A. and operates out of Bogotá’s El Dorado International Airport, transported 26,455 passengers during some of Colombia’s busiest travel dates of the year. Over 11 days surrounding Holy Week, Wingo operated 226 flights to destinations in Colombia and vacation hotspots overseas.

The carrier’s most popular destinations during Semana Santa included Cartagena and San Andres in Colombia as well as Mexico City and Punta Cana in the Dominican Republic.

“The airline market in the country has improved in the last decade and this accounts for the growing number of Colombians who now consider air travel their first choice when traveling,” said Catalina Bretón, chief executive of Wingo.

She added that airport infrastructure investment in recent years has strengthened Colombian carriers’ ability to better serve travelers during holidays when many are hoping to maximize their limited time to visit family and enjoy their vacations. “Airlines prefer punctual aircraft in order to strengthen our operations and satisfy our travelers,” said Bretón.

Across all airlines, Colombia’s aviation regulator Aerocivil reported more than 2.2 million fliers passing through the nation’s airports during the Semana Santa high season. According to the agency, the industry as a whole improved its customer satisfaction record greatly over its 2016 performance. Aerocivil received an average of 18 complaints per day in 2017 compared to 45 per day during the Holy Week period last year.

Photo credit: Wingo

From April 6 through April 16, according to Aerocivil, some 1.97 million people moved through the nation’s airports, including more than 196,000 who traveled by air on Easter Sunday. Today on April 17, historically another high-traffic day for transit, almost 216,000 more people are expected to fly.

Bogotá’s El Dorado International Airport was one of many in Colombia that saw increased passenger volume over the past week. (Credit: Aerocivil)

Aerocivil maintained an larger-than-normal customer service presence in airports across Colombia, including Bogotá, Cali, Medellín, Pasto, and Popayan, to manage the increased volume. It received an average of 18 complaints per day during the Semana Santa period, reporting an overall total of 198. This was less than half of the 45-per-day average over the same time frame in 2016, according to the agency.

“It leaves us very satisfied because there is confidence on the part of the users as far as air safety,” said Alfredo Bocanegra Varón, head of Aerocivil.