The economic situation next year is one of the great concerns that the government has, and from the center for economic studies Anif, its president, Mauricio Santamaríahas been emphatic on the need to take care of the country’s fiscal situation, and in response to this, he assured that the pension reform proposal would put more pressure on public finances.
(Read: What is known about the pension reform project that Mintrabajo enlists).
How do you perceive the economy in 2023?
The prospects for 2023 are not the best. On the international side, the environment is complicated, developed countries are raising interest rates, we have problems with supply chains and war situations.
The second thing is the national environment, where we have a very large fiscal deficit, and if we add the deficit of the Fuel Price Stabilization Fund, we are talking about more than 7 points of GDP. We have an external deficit between 5 or 6 points of GDP, inflation is growing, a very strong internal demand, which is good, but in an inflationary context not so much, and for this reason the Banco de la República is also raising rates to try to contain a little that growth; and a very high exchange rate, at levels we have never seen before, which is close to $5,000.
What can be done to contain this?
It is a complex situation, which if not handled well can hit us hard. There are two fundamental issues to deal with the situation in the best possible way, that is, not to add uncertainty to the economy, and it is something that has been done with policy announcements that do not help.
And second, let the Banco de la República carry out its task well, because if it is not going to end up eating us alive, the fiscal issue must be taken very seriously, next year we are not ready for mistakes, that could worsen the situation, and there are to try to promote the generation of employment.
We believe it will be a regular year. The economy is going to grow by a lot 1.5%, but it can easily be below that. You have to handle everything carefully, and above all not to put more problems into an already complicated situation.
In 2023 the tax comes into force, what impact will it have?
They are two things. The first thing is that it was a good sign from the government to present a reform and to have approved it so quickly, that shows that it does have a concern for the fiscal issue.
(See: Funds want to provide technical figures in the pension reform).
Mauricio Santamaría, president of Anif
private file
Now, with regard to what was left in the reform, we do have some concerns. Like what will happen to the issue of investment, and particularly in the energy sector, which has an importance that some people do not seem to appreciate in the Colombian economy and in the well-being of the people. But not only that worries, also the tax rates for shareholders or companies.
A lot of people talk about the impact on prices, especially from the food tax, but I don’t think it’s very big.
Another reform that the government has already announced is the pension, how do you see it?
Unfortunately there our opinion is very bad. What has been proposed gives us great unease, just like in health. We are really worried.
In pensions, what has basically been proposed is to give an income of $500,000 to elderly people in a situation of poverty who do not have any income during their old age. To this add a pillar in a medium premium regime, in which everyone contributes their first four minimum wages, and from there up in an individual savings regime. That is fraught with problems.
The solidarity pillar seems good to us, the problem is the amount, what the government is proposing is unpayable, it can cost $20 billion a year, everything from the tax. You have to see how much you can sustain fiscally. In the second pillar, which is the bulk of the reform, everything is wrongly planned. It’s a lousy business, it deepens subsidies that are badly targeted, but it also promises subsidized pensions in the future, it’s an expensive debt that we don’t have how to pay it. And another very serious thing is that the national savings, which are in the pension funds, are ending.
(Keep reading: Mintrabajo traces the path and schedule for the pension reform).
How do you see inflation?
It is a very complicated problem, and it has a very large impact on well-being because it especially affects lower-income families. It will surely start to moderate in the coming months, but it will remain high. That is very detrimental.
We all have to make the effort to continue this fight against inflation and the way to do it is with a restrictive monetary policy on the part of the Banco de la República, and be careful with raising the minimum wage, because that is going to hit hard. Raising the costs of the productive apparatus, companies and pensions will affect employment.
Tomorrow will be the annual Assembly of Anif, what will be the axis of this year?
The message we want to give is that we have very difficult challenges next year. We are going to talk about the reforms that are needed, what remains to be done in pensions, health, labor and energy issues. We are going to expose our visions to try to give some elements of analysis.
Laura Lucia Becerra Elejalde
