Clash of Presidents over Colombia’s Debt

A clash of presidents has occurred over Colombia’s foreign debt. The current head of state, Gustavo Petro, has blamed his predecessor, Ivan Duque, for having increased the Colombian debt, referring to an international credit requested during the Covid-19 pandemic. Petro described the former president as “the father of debt”. Shortly after this, former president Duque affirmed that Petro’s management “is worse than the pandemic”.

It recently became known that the increase of the Colombian economic obligation during the last year had grown by US$11.179 million, reaching US$198.034 million at the end of January this year. Although this represents only 0.1% more of Colombia’s Gross Domestic Product (GDP), the increase is considerable, bearing in mind that today Colombia’s debt is equivalent to 54.1% of what the country produces in a year.

Colombia will ask for renegotiation of short-term debt

President Gustavo Petro announced yesterday that the Minister of Finance, Ricardo Bonilla, will propose to the Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva, to extend the term for the payment of the debt with this organization, including the three-year loan that the country obtained to handle the Covid-19 emergency.

From Caucasia, Antioquia, where he led a day of formalization of small and medium miners, the current president said that the objective is “to change that short-term debt for the same debt – because we have to pay it, and we will pay it – but in the long term.” Petro pointed out that it is about “opening a larger financing space than the one we have for the social spending of the Colombian people”.

He stressed that the message to the IMF director is how the two parties can make Colombia’s debt profile better, “because they are choking and hanging us” between the health companies (EPS) and the politics of Congress. He argued this about the lack of support from other parties to approve his health reform bill.

Presidential clash

The loan Petro referred to was requested by his predecessor, President Ivan Duque, in 2020. Gustavo Petro brought this up to take the opportunity to blame the former president for the increase of the debt and its corresponding interest. This situation allowed Petro to brand the former head of state as “the father of the debt in Colombia”.

“Every time a tax reform for the rich is presented, they say no sir, no more taxes. President Duque did not go into debt. That was the father of Colombia’s debt (…) Last year we paid 75 billion, billions, that is, almost everything that could otherwise be delivering water to Colombians,” said Petro. He then added concerning Colombia’s obligations: “this year we have to pay 100. That is, the debt is increased by 25 billion from one year to the next, all because Mr Duque, to stop Covid (although he did not stop it), decided to put the country in debt”

The response from the former cabinet came from President Duque’s former Finance Minister, Jose Manuel Restrepo. “When making economic analysis it is good to be faithful to the facts and accurate in the information,” the former minister pointed out. “I propose a measure: Recover the growth (which we had in record levels in 2021 and 2022) and not continue in stagnation or recession of private investment. This way there will be more revenue, less deficit and less debt,” Restrepo responded, alluding to the current situation of the Colombian economy, with low growth and investment.

The former minister’s comment was retweeted by Ivan Duque, who only added: “Here it is clear how we faced a pandemic. Others do not realize that their management is worse than the pandemic.”