What Jumps Out: Predictable Hypocrisy

It was something of a quiet week here in Colombia however, the main event of the week certainly didn’t disappoint when it came to stirring up the locals.

President of Colombia Gustavo Petro exercised his right to replace two of the committee members of the Banco de la República – Colombia – and as expected there were immediate accusations of politicking. The Colombian constitution, to protect the independence of the Central Bank, only allows a president to replace two governors during their four-year term, however, this all fell apart during the Duque administration. Due to a combination of circumstances, Duque could make five appointments – two of which were criticized at the time as highly political. Leaving this time will be Roberto Steiner (2019) & Jaime Vallejo (2021) to be replaced by Cesar Giraldo and Laura Moisa Elicabide.

That same committee has been attacked from all sides, including those friendly to the opposition, for not lowering overnight rates in line with the rapid decline in inflation. Twelve months ago, Fedesarrollo anticipated YE2024 inflation of 5.5% and overnight rates of 8%. Whilst the inflation was even lower at 5.2% – the Central Bank still has rates at 9.50%. Whilst the Real Sector and Employment have picked up over recent months, it is fair to say that institutions such as ANDI – Asociación Nacional de Empresarios de Colombia, FENALCO, and Asobancaria thought that economic growth could have been far more robust, if the Central Bank had done a better job.

Was it incompetence? Perhaps that would have been the better answer. Unfortunately, evidence suggests that the once highly independent committee has grown political with Duque appointees more than happy to keep a leash on the petro economy. Hence, the irony when the president’s latest picks are criticized for perhaps leaning towards the government’s view on the economy.

Fedesarrollo this week reported another improvement in consumer confidence for December as it rose from -5.7% to -3.4%, when compared to 12 months before there is a sizeable improvement from the -17.3% registered at that point. This latest reading is the second highest since March 2019 as consumers expressed more confidence in the economy over the next year.

Away from these headlines, there was much media discussion about what the reform process will look like in 2025 and also a potential cabinet reshuffle – not for the first time!

Have a great end to the week.

Roops.

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Headline Image: President of Colombia Gustavo Petro. Photo credit: Presidency of the Republic of Colombia.