All presidents think at some point about how history will treat them.
What legacy will they leave the country after leaving power.
The Colombian Iván Duque tried in the midst of the pandemic to give a blow and respond from the economic field to a need that is always postponed in the country.
The aid put in place during the running of the bulls made it necessary to expand State revenue, and the Government presented a profound tax reform that, among other measures, increased the tax burden of the middle class.
The plan did not go well.
Like someone throwing a Molotov cocktail, the proposal ignited the anger of a society that had suffered like few others in the region from activity closures and quarantines.
The protests paralyzed parts of the country and lasted for more than two months.
Duke was forced to withdraw the project from him.
Last week marked one year since the start of the marches.
Today the ten economists or analysts consulted by this newspaper consider that this was not, in essence, a bad reform.
The problem was timing.
That chapter functions as a reflection of the country.
Colombia rides between enormous economic contradictions.
On the one hand, the good macro figures, which keep the country as one of the most stable economies in the region.
With growth above 10% in 2021, described as "surprising" by the International Monetary Fund, and upward estimates for 2022 in the midst of the difficult international scenario, which place the country with growth of around 5%, double expectations for the rest of the region.
On the other hand, there is enormous social discontent.
60% informality and 12% unemployment weigh down the labor market and deepen inequalities.
In 2021, the so-called year of recovery, poverty reached 39.3% of the 51 million Colombians.
With these wickers, the country now appears at the polls.
In two-round elections, voters tend to vote for the candidate they want in the first round and for their own or the least bad candidate in the second.
In Colombia, the deep polarization has turned the May 29 appointment into a kind of early second round in which two candidates —from the right and the left— concentrate 60%-70% of the total votes, according to the polls.
It is a race for the presidency between two opposite poles.
The establishment
candidate
Federico
Fico
Gutiérrez and the left-wing populist Gustavo Petro.
The two act as voting levers.
The uncertainty generated by the leader of the left, especially in the economic field, mobilizes the entire right and center right around Fico, while the idea of continuity associated with Gutiérrez unites those disenchanted with the status quo to place Petro at the head of all the polls.
Marcela Eslava, dean and professor of Economics at the Universidad de los Andes, argues that "any shift in any direction has a significant risk if there is no commitment from the new government to macroeconomic stability, which has been a fundamental pillar of the country," an idea echoed by economists and experts.
Paradigm shift
The possible arrival of Petro to power, which would make him the first left-wing president of Colombia, represents a paradigm shift.
The leftist, although he has been in politics for decades and was already mayor of Bogotá, is an outsider of the bipartisan system that historically held political power between conservatives and liberals.
His speech, and his past as an M-19 guerrilla, generates fear in much of the country's economic power.
"There is a lot of concern because we don't know how much of what he says he is going to do is going to be," says Silvana Amaya, an analyst at the Control Risks consulting firm.
The left-wing leader has spoken of ceasing oil exploration, as a preliminary step towards a greener economy, an issue that sets off all the alarms amid the enormous dependence on the export of raw materials.
His critics accuse Petro of wanting to lead Colombia down the path of Venezuela.
There is no intervention of the candidate or debate in which he does not repeat that there would be no expropriations if he reaches the Government.
A few weeks ago, in the face of constant accusations, he even signed it before a notary: "My proposal for the transformation of this country is not based on or includes any type of expropriation."
Some polls point to a draw if both Fico and Petro go to the second round (which takes place on June 19) and others give Petro the victory by the minimum, a sign of the polarization that crosses all layers of the country.
The latent and structural inequalities, exacerbated by the pandemic, draw many Colombias depending on who is asked.
Above all, in economic matters.
How is the country's economy right now?
The latest survey by the National Association of Businessmen of Colombia (ANDI) indicates that 80.6% of businessmen consider that the current situation is favorable.
"There is no company that today does not say that things are fine", adds the professor of Economics at the Javeriana University Jorge Restrepo.
The figures change if you ask the population as a whole.
Not only has the recovery of what is considered the fourth largest economy in Latin America surprised both inside and outside the country, the estimates for 2022 remain exceptionally good.
The difficult international context, marked by the war in Ukraine, is seen in Colombia as an opportunity.
"There is no good war, but it affects us positively on issues such as oil, increasing foreign currency income," explains Juana Téllez, BBVA's chief economist.
The rise in the prices of raw materials such as oil, coal, gold and nickel could increase the country's exports by up to 10,000 million dollars, according to estimates by some analysts, an extra of almost 25% compared to the 41,000 million that exported last year.
A group of workers classifies and packages roses in the Colombian municipality of Cajicá.
Guillermo Legaria (Getty Images)
The Colombian economy has shown more resilience than others in the region and, despite the devastating effects of covid, in September 2021 it had already recovered the GDP from before the pandemic.
But behind the party, some are already waiting for a hangover.
Among them, Professor Jorge Restrepo.
“We continue with that momentum, but we don't talk about how to stabilize the economy, which is destabilized.
Not only because of the growth in inflation, but also that extraordinary growth in exports.”
Colombia experienced a period of fiscal and monetary stimulus like never before during the pandemic.
Public spending increased both from the central government and from the cities to offer aid to the most vulnerable population.
During that period, the lowest interest rates in the history of the country were also given.
That boosted the economy, but more in the short term than in the long term.
“The moment of truth will be received by the next government, with very high interest rates for public debt.
That hangover [hangover] is going to be tough,” adds Restrepo.
The new government, which will take office on August 7, will have to face the structural reforms that have always been postponed and to which international organizations have been firmly alluding for years.
Inequality and entrenched inequity, the source of growing discontent, make it necessary to take measures to close the gaps in the long term and avoid a new outbreak in the streets in the short term.
The OECD, in its economic study of Colombia last February, points out that both growth and social inclusion are "trapped by weaknesses in structural policies."
The tax reform continues to be at the top of the priorities of all the experts.
The OECD highlights that tax collection generates only 20% of GDP and that barely 5% of the population pays income taxes.
Instead, he maintains, companies and societies bear an excessive burden of taxation, which discourages dynamism and investment.
In Colombia there is a general rejection of tax increases.
Putting this idea on the table always has political risks, as Duque confirmed.
Even now, in the middle of the electoral campaign, it is a fairly absent issue, which makes it difficult to clearly know the plans of either of the two candidates with the most options.
Former President Juan Manuel Santos knew this, and five days before the 2010 presidential elections he promised that he would not upload them.
He won the presidency and succeeded Álvaro Uribe, but later he broke his word.
Employment concentrates another concern.
"It is the great debt of the recovery," says Luis Fernando Mejía, executive director of Fedesarrollo.
The unemployment rate was 12.1% in March, still more than two points above the pre-pandemic period.
To this is added that 6 out of 10 workers are employed in the informal sector.
“It is atypical that in a country both things occur: unemployment and informality.
It is due to the regulations that do not encourage formal employment or the generation of employment, a reform is needed”, says Mejía, who places this as one of the greatest challenges to help reduce the increase in poverty, the great scar of the covid.
Despite the social aid launched during the pandemic, which undoubtedly helped to alleviate the blow, it was not enough.
In the memory of all Colombians, the image of the red scarves that thousands of people hung from the windows of their homes as a sign of help and hunger during the worst of the bull runs will remain forever.
Bruce Mac Master, president of ANDI, assures that “whoever wins [the elections] will have to attend to the two variables simultaneously [poverty and employment].
If only the vulnerable population is served, employment will not be generated.
It will be popular, but it won't last.
But if only good conditions are generated for the business world, there will be claims”.
The social unrest that last year mobilized millions of Colombians in the streets throughout the country and that caused serious clashes with the police forces, which left dozens dead, 80 according to social organizations, is still latent.
Oblivious to double-digit growth, the most vulnerable today suffer from the increase in inflation in their pockets.
Potatoes, for example, were bought in February of this year at 142% more expensive than a year before.
Annual inflation up to March exceeded 8.5%.
Pensions and spending
The country also has serious difficulties in getting public spending directly to the poorest households.
The current pension system, another of the vertices of the necessary reforms, barely reaches one in four older people, mostly middle and upper class, who are the ones who integrate into the formal market.
The duties of the next government are on the table, but the recipes of the Duke's successor are still unknown.
Colombia holds its breath in the face of a political scenario of maximum tension.
The uncertainty is palpable in the street, but three weeks after the first round it still does not play any role in the economy.
Téllez, from BBVA, assures that reviewing the history of the electoral periods, some volatility is seen, but "not a stronger than normal affectation".
The first three months of the year saw the largest purchases of public debt securities, some 1,000 million dollars.
Foreign direct investment reached 961.9 million dollars in January 2022, which represented an increase of 62% compared to January 2021, according to data from Control Risks.
And last week, the IMF granted Colombia a flexible line of credit worth 9.8 billion dollars, along with which it highlighted "the very solid macroeconomic management record" of the country.
Mejía sums up that before the polls there is more “pessimism” inside the country than outside.
“In Colombia this would be the first time that a left-wing president arrives.
From the outside that looks relatively normal, it doesn't look as exotic as it does here."
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