Colombian Update : What's New (s) : The Weekender

THE WEEKENDER

It is almost traditional here in Colombia that news almost shuts down over the weekend, unless it is football from anywhere on the planet the press are largely dormant, political fighting is suspended until Monday A.M, no economic data is published and where at all possible disasters where at all possible are held over until the working week begins, however a quick glance around the press gives us a flavour of what is on the minds of locals journalists. ON THE ROAD President Duque is already in the US and will spending the week addressing US law makers, the UN, Colombian immigrants and of course meeting THE DONALD himself - drugs and Venezuela are very high on the menu (is there a pun in there ?) In terms of drugs Duque is using the US as a platform to formally announce that the 'personal use' drug limit is to be abolished you may no longer carry an amount that equates to your personal stash - it will be confiscated. This is due to the explosion in drug usage locally and obviously plays well with Donald as he is forever on about the issue and unimpressed by increased production numbers in Colombia - of course as most every academic will tell you it is a demand driven business with massive, massive margins and therefore until that dynamic changes nothing much will be altered. The other subject which some what muddies the waters is the legalization of 'pot' (easier to spell) in some states and the emergence of medicinal related companies - only last week one of the major US companies was in a deal to buy a large grower in Colombia. I am deadly serious when I say the Government should nationalize the marijuana business here and become a major supplier of this commodity - the lessons of the other commodity industries which are foreign dominated should be learn't. If there is an explosion in usage locally my concept is that it is being driven in large part by tourism, I haven't seen the numbers but his is going to be a classic game of Whack-a-Mole, unless this comes with custodial sentences it won't have any impact - the local police can't be bothered as they have way too many things on their hands and for those who do find their stash confiscated it will take them about 2.4 seconds to walk around the corner and re-purchase, at cents on the dollar versus the developed world, the lost items. Item two is Venezuela where both Donald and new US Ambassador Santos (yes cousin of the ex President) have been involved in some minor saber rattling - in the latter case Santos has now been told to guard his silence on the subject by Duque as it caused some angst locally. Nothing will be done of course in terms of removing Maduro, pressure can be maintained but the screw is already tight and the local populous will have to do the heavy lifting - the best Duque can hope for is more global help in terms of refugee aid, UNESCO (of course belittled by Donald) are doing great work but $100mn wouldn't go amiss at this point. As if to close the loop Emperor Maduro this weekend was publicly asking Colombia to take action over the increased drug production in the country - in short I would imagine much of his populous require it right now and also multiple members of his inner circle have already been investigated or arrested for drug trafficking - a large glass house he is occupying one feels.

SECTOR IN MOURNING The situation surrounding the brutal murder of three Continental Gold geologists last week remains raw and rightfully so - the family are pointing the finger at the company saying their kin shouldn't have been in the field following on from threats, those on the right are blaming the FARC - it is a mess and both investors and those in the sector are deeply concerned - I am no geologist and they are not my family members so it is easy to appear distant but that isn't the case however here are a couple of basic thoughts on all this :

• Continental Gold aren't going anywhere, they have sunk so much money into Colombia, primarily in Buritica and they should demand, expect and have their asset there 100% ring-fenced - they are a lawful company going about their business and HAVE to be protected.

• In terms of Yarumal where the incident took place there are particularities to the zone, it is on one of the main drugs routes and as the oil sector found in the south of the country in previous years this can lead to a hazardous mix of narcotics, weaponry and people who don't want strangers in their region - of course the authorities need to get a handle on the problem asap but in the meantime extreme caution must be taken with the lives of those in the sector.

• The dissident FARC are to blame for the three lives but equally it was the paramilitary offspring of the Clan de Golfo who killed the other engineer a few days before - the enemy here has a name but it isn't any particular group - it is evil and that evil is related to greed and a disregard for human life, sadly there is still an abundance in Colombia.

This is a precious sector in every sense of the word, as a commodity, in terms of its potential value to the country and above all the lives of those working in the sector.

CARRASQUILLA The FinMin was back in the press as Sergio Fajardo who is already eyeing a run in 2022 was the latest in a lengthy article to state that he should stand down - this wasn't so much a rant, as we have seen from those on the left, but more of a considered look at what occurred with regards to to Water Bonds which were created when he was FinMin last time around - the main complaint isn't his subsequent actions but the duress caused to the municipalities in terms of the debt burden. I doubt it will have much effect and Carrasquilla will go forth however he will be feeling the pressure after just a few months (not even) at the helm.

TAX REFORM Dinero magazine produced what it alleges are the three options (packages) which are to be proposed by the aforementioned minister when it comes to the tax reform - with the sizeable caveat that things are often leaked into the public eye in order to gauge the reaction and then adjust any such measures prior to the official launch here are a few tentative thoughts on what are some very general measures - numbers mentioned are very approx :

• Around 60% of the USD8bn deficit is to be funded by VAT increases with two options - staying at 19% but broadening the base of products covered or moving down to 17% or even 16% and covering an even broader base of products.

• For the most needy there will be compensation - some kind of social security - the howls of derision can be heard from that group already because such projects in Colombia have a miserable history of not working.

• A lowering of corporate taxes from 2020 - hoorah !

• A higher top rate of tax of 37% for those earning over USD10,000 per month.

All well and good but I am immediately drawn to what I can't see - either I got bored by table three or there is no plan to expand the tax base in terms of income tax ? Is it to come later ? Did I fall asleep reading ? Or did the Government bottle it ? I really hope it isn't the later because the rich have more than carried their load over recent decades and whilst they can afford it and should pay others in this society need to help with the burden - if not any attempts to improve the data when it comes to evasion will flounder.