The effects of the reform in the financial system, according to Asobancaria

The effects of the reform in the financial system, according to Asobancaria

The 56th edition of the Banking Convention, ‘Building opportunities for all’the most important event in the Colombian financial system, organized by Asobancaria at the Cartagena de Indias Convention Center.

(Asobancaria supports prohibiting payments of more than $10 million in cash).

The event will serve for the financial and private sector, academia and unions to exchange ideas with the new government on how the system can continue to contribute to the growth of the economy and promote the policies of the administration of Gustavo Petro, who will close the event on Friday.

Hernando José Gómez, president of Asobancaria
spoke with Portfolio about the issues of the current situation.

What do you think about the tax reform?

The reform is necessary, since it is essential at a time when we begin the cycle at its bottom and economic activity begins to be restricted. It is necessary to maintain a macro balance and rebalance the fiscal rule and reduce the fiscal deficit.
The reform is well oriented, since we have always said that in Colombia 80% of taxes are paid by companies and people with higher incomes are expected to contribute more.

The second thing that is interesting about it is that it tries to eliminate many exemptions from various sectors of the economy, and Minister José Antonio Ocampo’s opinion is good, since the Government said that it is willing to discuss and if it is proven that the social benefit of The exemption is greater than the tax loss it has, and it would remain that way, but if the loss of collection is greater than the social benefit, then it must be removed.

(The challenges set by the guilds for the first 100 days of government).

We are concerned about evasion, because we must think that wage earners have already paid enough taxes and have a normal tax rate, although I agree that there should be more taxes on higher incomes. But since there is so much evasion, the tax reform should contemplate avoiding the overuse of cash, since that is fundamentally to evade taxes or to commit crimes.

What else could be included in the initiative?

Large transactions must be carried out through financial instruments. Even if the use of cash can be reduced, there would be room to cut the 4 per 1,000 without reducing the collection for this tax, because if more operations are carried out by the financial system, these would allow greater collection in the future. It must be remembered that this tax generates many incentives for financial disintermediation.

On the subject of the surcharge on the system, we have stated that these are anti-technical and inconvenient because they can affect investment in the sector, but we understand the country’s fiscal situation and we do not believe that this is the time to dismantle the surcharge, but we want it to be temporary and not permanent, and that will be part of the dialogue with the government.

Are there issues you like and don’t like about this tax reform?

They are more or less the visions that I have just expressed in the general plane. I would not like to argue about any specific sector.

How did the financial system do in the semester?

The system is doing well because the country is doing well. When employment and growth are generated, both do well. This is what happened during the first semester.

(Asobancaria proposes that financial education reaches 30% in schools).

As the economy grows, the delinquency of the portfolio decreases. This indicator is currently at 3.8%, lower than the pre-pandemic and, in this sense, the demand for credit should also be highlighted, since the portfolio grows at 14%. This semester has reflected the good behavior of the economy, although we know that in the second semester consumption will return to its historical patterns and consumer credit will moderate.

With such a dynamic portfolio, are there possibilities of over-indebtedness of families?

At this time, the level of household indebtedness is 30% of the families’ disposable income and for the payment of their obligations. We are aware that after the consumption boom in the country, this has to be moderated.

The compensation for the restriction of consumption during the pandemic has already been carried out, now it has to be private investment and exports that have to boost the economy.

Has the rise of digital banking and fintechs resulted in a regulatory imbalance in favor of the latter?

Regarding digital banks, the regulations are balanced and we welcome all these initiatives such as Lulo Bank, Ualá, Nu, etc. To the extent that the same services have the same regulations, we welcome this new competition, since it increases depth and financial inclusion with more people using financial services.

It is interesting, because digitalization is also increasing in traditional banking and there are already more than 14 digital wallets from different banks with leaders such as Daviplata and Nequi. This competition accelerates digitization in supply and demand, and already 72% of banking operations are digital.

In addition, the first open banking regulations have just come out, which seeks to provide more services through bank applications and that will generate more user traffic and lead to a higher level of financial activity.

Is it only possible to combat inflation at the tip of rates?

The main instrument of the Banco de la República to control inflation is with rates. With a demand issue it is easier than when it is due to a supply shock. The Issuer does what it has to do, which is to control inflation, the worst tax for households and workers.

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