Colombian Update : What's New (s) : Infrastructure, Politics, Corruption.

THE WEEKEND

This morning a very quick look around what made the news over the past couple of days, overall it seemed pretty quiet but there were a couple of headlines worthy of discussion. AMAGA This is a small town that lies betwixt Medellin and my weekend abode which is normally only known for coal mining and a restaurant charmingly called 'La Curva del Gordo' (The Fat Man's Curve) which serves the most delicious traditional fare, the type where you feel your arteries tightening as the food is digested, however this weekend it found itself in the spotlight as Government members including President Duque descended from on high. Whilst there were several subjects on the agenda during the trip to the region the one that stands out is the mini-summit held there in order to discuss the bottlenecks in the 4G infrastructure project roll-out. Overall things appear to be moving along better than expected however the Government have decided to install in conjunction with the ANI and the DNP a working committee to examine particular hold-ups in projects with one area being financing although the DNP themselves have appeared happy enough thus far with the funding in place. One major concern raised by the new infrastructure Vive-Minister at the hand-over from the ANI is the growing number of injuncions - there are currently 31 active legals cases related to a number of issues including community rights and another 12 are being armed. Whilst this total being sought runs to several millions of dollars the bigger concerns are the legal costs to the ANI and the time being burnt in the courtrooms and lawyers offices as well as the delays caused. Another area of interest are tertiary roads which are a major concern given the ongoing issues caused by any sort of adverse weather and the constant inability of local authorities to find permanent solutions - I have lost count of the times the roads en route to the farm have been 'patched' and then a few weeks later have deteriorated once again, it is classic local Government short term-ism, doing the minimum and passing the buck to the next administration. Whilst the summit itself may have been slightly on the melodramatic side given the process thus far any little push in the right direction is more than welcome by construction companies, investors in those sectors, local communities and on a personal basis as it will reduce my travel times considerably.

PANAMA PROBLEM Our recently installed President will make his first official visit overseas this week when he makes the short hop to Panama to discuss bi-lateral trade and other such issues and it is quite feasible that President Duque might find himself fielding a question or two from his hosts about Finance Minster Carrasquilla. A weekend press article has called into question his integrity claiming that a private company registered in Panama that he was partner of made huge financial gains from the so called 'Water-Bond' legislation that he himself created when he was previously FinMin in 2007 - a clear conflict of interest according to the article which makes for damning reading, clearly the press is the press but it has stirred up a hornets nest in Congress. Leading opposition figures are already preparing a debate to discuss a motion of censure - to paraphrase the words of Jorge Robledo one of the most heavily voted politicians in the country "If this is true then they he has been working in the grey areas between the public and private sector and if Duque is serious about corruption then he must be removed from the Cabinet" Carrasquilla has over just a few short weeks become something of a pantomime villain with his pronouncements on tax increases and obviously the opposition were going to pounce on this - it will be interesting to see how the independent parties on Congress view the situation.

CORRUPTION This is a nice segway into out next theme which slid somewhat under the radar a the end of last week - despite the anti-corruption vote failing to reach the threshold required the subsequent call for action from President Duque has already had results. Late Thursday the technical committee which was convened as a consequence agreed to initially freeze the salaries of politicians and high level state officials for the next 10 years in order to lower them from 40x to 25x the minimum wage - the main protagonists wanted an immediate reduction however this is a step in the right direction as far as many in the country are concerned. Another area where there was agreement was the limiting of Congressional careers to three four year periods which was another demand of the referendum - again this is progress but the committee still has much work to do however as the very prickly issue of state contracts and tendering is just of several areas yet to be debated. MARKETS Apart from that the US is now back at work after the holidays (it almost gives the impression of a ghost town the way people refer to it) but that is unlikely for the time being to have much impact on Colombia where the most recent market flow data for August revealed that foreign agents had continued their recent tendency as the main seller - this of course can be deceptive in the case of block sales however ideally that would be buyers. The net result is that local AFPs continue to accumulate stock which isn't ideal, especially when many of the purchases are the local ETF which doesn't particularly help volume but does at least have the effect of supporting the market due to the inefficiencies involved. Aside from that Turkey, Argentina & China are all making headlines locally and that will continue to impact sentiment in the short term alongside festering concerns over the exact structure of any tax reform.