For the Minister of Finance, “it is not enough to generate growth”

The Colombian economy is on a positive path, but the outlook ahead is full of challenges. This was one of the conclusions of the event ‘Leaders look to the future’, organized by Portafolio.

(These would be the biggest challenges that the Colombian economy will face).

In the space, the outgoing Minister of Finance, José Manuel Restrepo, presented a balance on the economy left by this administration, in which he stressed that the country has three challenges ahead: “continue to grow, continue adjusting public finances, being aware of income generation, and continue adjusting the current account balance”.

The minister classified as an economy of “three acts” the situation experienced in the last four years. The first, prior to the pandemic scenario, in which the economy appears as one of the countries that showed an acceleration in a context of lower global growth.

The arrival of the health emergency due to covid-19 marked the second moment. “The pandemic adjusted our priorities to serve those most affected,” said Restrepo, and recognized as “The social aids made it possible to mitigate part of that social loss that was generated”Restrepo concluded.

(The private sector must participate in the public discussion: entrepreneurs).

Finally, there is the post-pandemic reactivation, which was seen both in the 2021 GDP (10.7%), and in the recovery of indicators such as unemployment, poverty and informality, which continue to advance.

“Colombia will have the highest growth rate of the OECD countries, with 6.5%, but it is not enough to generate growth, it is essential to generate better social dynamics. The important thing is that more than 100% of the jobs that were lost in the pandemic have been recovered,” said.

The minister stressed that the fiscal deficit has also been significantly reduced and that public finances are improving sooner than expected.

“Something that I did not expect is that the public debt adjustment path planned for 2032 will be achieved early, in 2022 we would close at 62.5%. This adjustment of public finances has been 10 years more accelerated than expected”, assured the minister.

RISKS IN SIGHT

The event also included a panel of experts, who discussed the challenges that the country will perceive in the medium term.

José Ignacio López, head of economic research at Corficolombiana, mentioned that in the remainder of the year the growth rates will begin to moderate and that the second semester “will show the materialization of some risks that have been materializing”such as rising interest rates, and inflation beginning to ease, but gradually.

The director of Dane, Juan Daniel Oviedo, mentioned that in the external component one of the strongest risks is inflation. “A big question is how the next administration is going to handle the snowball effect generated by the indexation of public services in inflation,” Oviedo said and spoke of the need to boost productivity and employment. “We must not forget that the pandemic did not erase the problems of the past”, the official said.

On the other hand, the president of Asobancaria, Hernando José Gómez, said that the challenge of the new government is “maintain the confidence of investors, that they maintain their investment plans”, and added to this, increase the total productivity of the factors.

Ricardo Ávila, a senior analyst at El Tiempo, identified three risks. “I think we underestimate the seriousness of what is happening in the world. The conflict in Ukraine is serious and is beginning to affect the economy”he said, and also pointed to the risk in terms of rates, which leaves the new government with less room for maneuver, and inflation as concerns. “The third issue is that of the government’s decisions, what does the tax package include and what does the spending package include”Avila said.

THE BUSINESS SECTOR ALSO SEES CHALLENGES

Within the framework of the event ‘Leaders look to the future’ A business panel was held in which various leaders from the private sector spoke about the opportunities and challenges for the country for the rest of the year and their role in the government transition.

“The challenge is to maintain that growth that we bring with the reactivation, with the costs of inputs and interest rates”said Roberto Moreno, president of Amarilo, who stressed that construction has seen an important dynamic and that the firm expects this year to meet the goal of selling 13,000 homes.

Juan Manuel Rojas, president of Promigas, assured that the company sees “The prospects for the remainder of 2022 and 2023 are very positive,” and assured that they plan to continue investing, between $930,000 million and $1 billion, in transportation and gas.

Guillermo Jaramillo, president of Kpmg Colombia, said that today there are two important challenges, “The internal depolarization, in the form of political thought of the collaborators, and also the generation of trust. “Managing that uncertainty is the challenge this year.”

Jaramillo spoke about how the firm has doubled its tax advisory area to accompany its clients and Colombian society to better understand the impact of the coming reform.

Cristina Vélez, dean of the U. Eafit School of Administration, spoke from the academy: “universities must adapt to what the market is asking for, but also ‘be the voice of conscience’, and understand that there are basic things in which they must serve”. Facing the new government, the role of the academy, he said, is “not be apathetic or disregard the country’s politics.”

LAURA LUCIA BECERRA ELEJALDE