WHEN DOING In an evaluation of the management that the Petro government has given to the economy, the former Minister of Finance, José Manuel Restrepo, not only defends the previous government in the way it left finances, but also criticizes the enormous spending of the current Administration.
At the same time, the rector of the EAN University shows his concerns about the management of the microeconomics and believes that, when carrying out a balance of the government’s performance with the economy and the pressing needs of the country, the management is barely in the middle.
The former Minister of Finance points out, recognizing that among the successes of the Executive is the implementation of a tax reform that was made with consensus, as well as the determinations in the increases in gasoline to curb the high deficit of the Fuel Fund.
But at the same time, he claims that the same consensus should be made for the social reforms that the government wants to advance, mainly so that they have clear accounts of how much, for example, the pension reform will cost.
the deficit
THE NEW CENTURY: President Gustavo Petro criticized the previous government for the fiscal deficit, what is your opinion?
JOSE MANUEL RESTREPO: President Petro should not be unaware that thanks to the management of the previous government, the Colombian economy stood out among the first three economies with the best economic recovery after the pandemic. It should not be forgotten that we had a very difficult time, which was the pandemic, where production was restricted, tax revenues were restricted, and the need for resources to care for the most vulnerable increased substantially. People who lost their jobs and those who were informal were accompanied, creating social programs with very important resources in the midst of these difficult circumstances, in addition, Colombia was the first country in Latin America to adopt a tax reform after the pandemic.
ENS: But, in addition, were the international commitments fulfilled?
JMR: We complied with all the amortizations and payments of the public debt, something that the risk rating agencies and the International Monetary Fund itself recognized Colombia as one of the countries with the best fiscal and economic performance in the midst of the pandemic. Obviously, we had a complex situation, but now we are seeing that the latest Medium-Term Fiscal Framework is changing the picture because it is contemplating not a decrease in the fiscal deficit, but an increase, that is, the trend of fiscal adjustment has been broken. The Autonomous Fiscal Committee even said that expenses are increasing excessively, almost an additional 2%, returning to levels of public spending that we had in the pandemic.
contradictions
ENS: Isn’t it a contradiction that the government is spending more, when it has so little budget execution?
JMR: Budget execution is the worst in 22 years. It is clearly a contradiction to spend more with less execution. That in fiscal terms is incredible, since it can benefit them to improve the fiscal result, but in the long run it is a problem. It is certainly unnecessary to increase spending levels.
the tributary
ENS: What would you highlight in the economic management of the government, when you are about to complete a year in office?
JMR: In some sectors, it stands out to have carried out a consensual tax reform, with some differences that I may have had, but it seems important to me to generate additional resources that also continued with the effort on the subject of sustainable finance and also with social content, after the framework prosecutor we left. I think it is positive that Minister José Antonio Ocampo’s paths of fiscal adjustment and recovery continued, as well as the effort to reduce public debt. They followed the path of the 2022 fiscal framework and thus the financial plan continued, which sends a message of tranquility to international markets. All this despite the fact that other government actors sent somewhat mixed messages, such as the issue of energy transition and the issue of capital control and the independence of the central bank. They were messages that, no, what is your opinion? Investors liked them.
ENS: Does that affect the country’s credibility in the eyes of risk rating agencies?
JMR: It may be, it was even reflected in the concepts that the Autonomous Committee of the fiscal rule took at the time to continue what was proposed in the fiscal framework of 2022, to gradually close the price differential gap. It also seems to me an adequate management with the management of the increases in fuels.
ENS: What concept do you have about the objectives of the energy transition, which is one of the flagship programs of the government?
JMR: If an orderly and responsible energy transition is not carried out, it can lead us to a very difficult situation in economic matters. Do not forget the importance of what is currently generated by oil or mining, these are resources that are important for the country.
social reforms
ENS: What do you think of the social reforms that the Government wants to advance?
JMR: It also seems to me that the reforms in general generate concerns in the business sector, you cannot govern with these social reforms if you do not take into account what the private sector may be feeling. In addition, the labor reform that fell was disastrous for entrepreneurs. Likewise, the pension reform could destroy all credit and long-term investments in the country. As for the health reform, we do not know how much it costs. In addition, the fiscal framework does not contemplate the costs of the reforms, which is very worrying from the point of view of fiscal sustainability. That is why it is important that the government reach consensus with the business sector, with the private sector, otherwise we will not generate jobs and income.
ENS: In your opinion, what would be the main immediate challenges to straighten out the country’s economic situation a bit?
JMR: It seems to me that the path of finances must be fixed, it is very important to revise the Medium-Term fiscal framework, which income is true, and a new budget must also be adjusted so that in 2024 we can continue the fiscal adjustment, that is, , continue reducing the fiscal deficit and continue reducing the level of public debt. In addition, a productive dynamic must be achieved. We must improve the housing sector, this to improve the generation of employment. What is achieved with the tourism sector seems important to me, it must be accompanied by supporting the industrial sector. These are key sectors for job creation and income generation. It is necessary to generate certainty so that investment does not fall, so it is not only about managing the macro figures, but also making an effort in terms of micro figures to strengthen the productive dynamics of the country.
ENS: Do you think that in the midst of the uncertainty that has been generated by some announcements, capital is leaving the country?
JMR: Not only do I believe it, but the figures show that there are capital movements abroad. But that is something that is not uncommon, since investors look for the best markets for their profitability.
The evaluation in half
ENS: What evaluation would you make of the government’s economic management?
JMR: In macroeconomic matters, I believe that there are uncertainties that were generated with the discussions of social reforms. In micro matters, and according to the figures, they do not have good results in some sectors of the economy, but to the extent that these reforms generate uncertainty for the business sector, it should do better. But it is necessary to correct the course, especially, in understanding that it is the business sector that generates dynamics, I believe that we are in the middle, that is, we are in the middle of the ratings.