Colombian Update : A New Day - The Presidential To Do List

A NEW DAY

Today is an important day in Colombian history, the Battle of Boyaca, it celebrates a large battle over a very small bridge which led directly to the independence of Colombia & Venezuela as well as being the first step towards the downfall of the Spanish in both Ecuador and Peru - of course the British hooligans were there to help the Colombians in their struggle, in fact Simon Bolivar credited them with the victory - it also represents the date every four years on which the President is sworn in.

THE KING IS DEAD.... So the Santista years are over and Uribism has returned after an eight year absence, we may see the development of Duqism as time ticks on but for now the incoming President is seen as the extension of Alvaro Uribe’s power. What can we expect ? What does he need to address ? The list of needs in Colombia are so extensive we could still be here in a week’s time but it strikes me that after eight years of declining violence and poverty the expectations of the populace grow ever greater. The people are now accustomed to so many things that prior to the economic and security boom were seen as luxuries or too dangerous that they now expect more - they don’t want that simple car anymore they want the better model, they no longer want a health system with broad coverage they want it with faster, they don’t want basic education they want an education good enough to enhance their prospects - times have changed. Here are 12 things to address in 2018-2022.

• There is so much fraud etc in this country that everyone is suffering from corruption fatigue, headlines that would cause shock in the developed world often result in no more than a shrug of the shoulders, a feeling that we have seen it all before and that nothing ever gets done - this needs to be addressed and prosecuted to the full extent of the law.

• Economically Carrasquilla will have a free swing until 2020, Santos’s team in conjunction with the Central Bank have done quite brilliant work in damping down the flames of inflation, curbing spending and abiding by the Fiscal Rule - that discipline means the oil shock has been absorbed, rates are at expansive levels and there is already a pick up in sales, the industrial sector and exports - that same discipline needs to be continued in order to maintain investor confidence.

• We need yet another tax reform, there are so many things to address but two major areas are the expansion of the tax base, a desire of Santos which he was unable to carry out, and a zero tolerance policy on tax evasion coupled with new land taxes.

• Justice doesn’t work in Colombia, it is slow, cumbersome and in the end many of those prosecuted never serve sentences in jail as there is no space and criminals are sent home instead or are released without prison time only to re-offend two minutes later.

• The peace process with FARC needs to be accepted and the country (and Congress) need to move on, there are far bigger and more dangerous enemies terrorizing the countryside who need to be brought to heel - the Congress has a full schedule and no time to waste on old battles.

• Some sort of land reform, this needs to be a key component in an attack on the GINI coefficient issue, it is a political minefield but Duque needs to tip-toe his way through his own party and satisfy the demands of the poorest sectors of the countryside. This could help the agriculture sector which is still labour intensive in Colombia and help provide jobs and also encourage a return to the rural areas of those who migrated to the cities during the violence.

• The 4G projects will be one of the great Santos legacies, the capacity to look beyond his own administration and when Duque finishes in 2022 we should be about 75% done on the first wave and every effort should be made by the Government and all agencies involved to make sure that is the case - hopefully 75% proves to be a conservative number.

• The mining sector needs a massive injection of time and legislation, it has floundered for years and the many armed gangs have started to dominate the sector in many regions. That build out needs to occur without the backhanders that have become too common, gold in particular has such potential which hasn’t been realized and which could have paid for the infrastructure build out single handily if this had all been organized properly years ago. Finally the informal death trap coal mines need to be shut down or reformed, they dot the landscape and disasters are frequent but little is done.

• Minority rights need to be upheld and expanded, at a time when the developed world is moving ever further in terms of guaranteeing equality Colombia is still a country where there is a stigma related to any kind of alternative lifestyle, that needs to be fully removed irrespective of whether it is based on sexuality, colour or any other metric.

• There needs to be a fresh look at the capital markets, they have become mired in red tape and bureaucracy, this is still a relatively fledgling market but it has been in decline ever since the Interbolsa scandal, no-one wants to say it out loud but there are issues - we are of course no different to any other financial market which finds compliance around every corner but Colombia’s market simply isn’t in the same league in terms of robustness. There are better signs on issuances this year but we have to make this isn’t another 2012 which represented a high water mark and then next to nothing happened for years.

• Education and Health need to be improved for those not living in the top eschalon of society - there is good health coverage here but some tweeking is needed and education needs to be improved, you only need to thumb through a text book from a rural school to realize that the opportunities for those born in some areas of Colombia are simply not there.

• Pension Reform - as per every country in the world there are problems, fortunately Colombia enjoys a very young population however whilst we have that situation we need to capitalize and put things in place for twenty years time. Also the pension fund themselves need more scrutiny and flexbility in terms of their offering, years ago (I lose track of how many) multi product investment schemes were developed but the agressive funds geared towards the young simply never got going to any extent due to the aforementioned bureaucracy that accompanies every step of the finance sector.

Of course numbers 13-100 on the list also exist but there are going to be overpaid politicians looking at those, it is going to be a complex four years. The good news is that Santos despite his low approval level has done very well in many respects - poverty levels, unemployment, economic management, OECD memberships, 4G, FTAs, Colombia’s overseas image - the peace agreement became a side show and a stick for the right to beat him with but the successes well outweigh the failures. The bad news is that leaves a lot less to be achieved and arguably many of those things that remains are extremely tricky, hopefully President Duque is as good on the tight rope as he is on the dance floor, he will be desperately hoping that the legal situation around Senator Uribe dissipates as quickly as possible - it is drawing global attention to Colombia and not in a good way and taking the light off the incoming President. These could be divisive years, one hopes not but we are living in an era of genuine opposition, a left that has been emboldened by the elections - at street level they represent the majority and there is likely to be scrutiny like never before over Duque’s movements. Another event to watch out for today is the national rally by the opposition - it has no main message but is more a show of strength to demand the peace agreement moves forward and to also push support for the referendum on August 26th which aims to curtail the malpractices in the Congress. Ivan the very best of luck, it will be needed as any serious missteps will deliver the country to the hard left in 2022, as for Juan Manuel enjoy the rest and hopefully he will keep his word of being basically the first ex President in Colombian history to simply write a book and do a speaking tour as opposed to continuing to meddle in politics - what price the first Latino head of the UN ?