How can the second year of the Petro government be? What can you expect?
In essence, this phase will depend on: 1) what happens in the October 29 mayoral and gubernatorial elections; 2) if the economy definitively enters into recession, as the Bank of the Republic says, or if, as private analysts expect, it begins the upward phase soon; and 3) Petro's reaction to the mid-year governance crisis, which still weighs on his government.
Let's first take what we might call a "good-good" scenario for the opposition. That is, the left loses elections in cities where it has been strong, such as Bogotá, Cali and Cartagena; and in Medellín and Barranquilla the results are adjusted to the polls, with triumphs of Federico Gutiérrez and Álex Char.
In addition, the economy rebounds from low growth, confidence begins to recover, inflation subsides and, sooner rather than later, the Bank of the Republic begins to reduce, quickly and strongly, its interest rate.
This mixture would lead to Congress, not the government, defining the reform agenda; that is, what is approved and what is not, as happened in the Government of Iván Duque. That transition will not be without drama, as the president will maintain the feeling that he won the elections and was not allowed to govern, and will continue to lash out at businessmen, the media and the parties, accusing them of what are in reality self-inflicted defeats.
Meanwhile, the Cortes will be in charge of the appointments of the attorney general and pending, later, five new magistrates for the Constitutional. They will have to produce key rulings on the Development Plan, the non-deductibility of royalties and exotic surcharges on miners and bankers, and they will remain as a retaining wall.
The press and businessmen, after enduring months of presidential insults with patience and resignation, will be more legitimized to continue defending the good of the past, which is no small thing.
In that case, it is possible that moderate versions of the pension and health reform will be approved, preserving the mixed provision of private and public insurance; It would be difficult for labor to prosper (again), or invasive initiatives in public services.
If the good-good materializes (for the opposition), both companies and households will look more calmly at their economic situation and falling inflation will stop hanging their budgets. Declining bank interests will give a necessary respite to the cash of companies and will be an opportunity for credit to return to producers and families, which is where it is put to work, increase assets and improve the quality of life.
Names of candidates for the 2026 presidential elections will begin to emerge, with the beginning of the political pendulum swing to the center or center-right.
Now let's look at the opposite scenario. The left wins in Bogotá, Cali and Cartagena, and the economy goes into recession in the last quarter of this year; or even it is already in recession, something that we will know when the DANE publishes figures for the third quarter, and that would extend to 2024.
The attention of the press and businessmen will begin to privilege characters of these political tendencies, and their success in 2026 will become a self-fulfilling prediction. Political parties would be faced with the dilemma of accepting some of the government's most radical intentions on health, pensions and labor issues. And the investor conviction for Colombia would decline.
The government would feel more justified in continuing to bully key sectors such as hydrocarbons, EPS, power plants, industrialists and bankers. It would persist in demonstrating that the private sector and free markets do not work, and in inducing their transition to the public, either through direct intervention, in the case of public services; or through invasive regulations that privilege public competitors over private ones. This attitude would worsen the economic outlook.
The perspectives mentioned in the two scenarios show that the second year of the Petro administration will be the definitive period, where the depth of its effect on institutions, markets, incentives, disturbances of private activity is defined. Of course, reality finds grooves different from those we schematize. Something in between, with mixed dyes, may be what ultimately turns out to happen. That forces us to be alert to the signs.
As the elections in Spain and Chile showed, on October 29, 2023, anything can happen. The government will work hard to promote its candidates, and will have tremendous logistical power in poor neighborhoods so that the votes overturn the results, and that the predictions of the polls are not fulfilled.
As Zabala, Vargas Llosa's character in the novel Conversation in the Cathedral, asked, the October elections may be the moment when Colombia was screwed.
If all flanks are not covered and the containment of the invasive, abrasive and disruptive attitudes of the executive is strengthened, we will enter an even more challenging phase than we have experienced so far.
The chain is broken by the weakest link. What could be the weakest link in the 10 months to August 7, 2024? Poor voters, seduced by government candy and pressure from armed groups? Entrepreneurs and the media? Political parties, some liberal, conservative or U parliamentarians? The magistrates of the high courts?
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