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An economic balance of Colombia and what lies ahead for the first round of presidential elections

An economic balance of Colombia and what lies ahead for the first round of presidential elections

Table of content

Reducing VAT from 19% to 10%; industrializing Colombian agriculture; reducing the labor gap between men and women and encouraging a transition to renewable energies are just some of the economic proposals of the presidential candidates. We took stock.

Colombia, a region of 51 million inhabitants, sheltered by two oceans and extensive mountains that spread throughout its territory, is about to elect its next president on May 29. 

PRODEZK summarized the main economic proposals of the presidential candidates Rodolfo Hernández, Federico Gutiérrez, Gustavo Petro and Sergio Fajardo, the most likely, according to the Invamer poll, to win the presidency of Colombia. 

We wanted to make a balance with important data on the economic context of the country. 

According to the International Monetary Fund, Colombia ranks as the fourth economy in the Latin American region. Taking as a reference the Gross Domestic Product (GDP) indicators for 2020, in first place is Brazil with 1,434 million dollars, followed by Mexico with 1,076; Argentina 388.28 and Colombia 271.46. 

According to information from the DANE, inflation, so far this year, stands at 5.66%, while in the period from January to April 2021 it was at 2.16%. A figure that alarms and is a consequence, analysts say, of the restrictions to international trade in Shanghai and the war between Russia and Ukraine.

On the other hand, according to a Dane report, as of April 2022, the Consumer Price Index (CPI), by spending divisions shows that all activities increased for the fourth month of the year, the highest monthly variations: clothing and footwear (2.99 %); food and beverages (2.75 %); household goods and services (1.49 %); recreation and culture (1.18 %) and the list goes on. 

Colombia's external debt exceeds 50% of its GDP. Public and private sector obligations amount to US$171,954 million, a figure that has been rising. According to statistics from the Bank of the Republic, there was a 10.69 % growth compared to January 2021 when the debt was US$155,345 million. 

The consequences left by Covid-19 in Colombia are felt in the social foundations. According to the Dane, more than 21.02 million people subsist on less than $331,688 per month (around US$84), an amount that, according to the entity, is the poverty line in Colombia. 

Bogota was the city with the largest number of people living in poverty with approximately 3.03 million people; in second place Medellin with around one million people; Cali with almost 800,000 and Barranquilla with almost 700,000. In summary, 6 of the 23 cities and regions studied registered more than 400,000 inhabitants living in poverty. 

That is why it seems important to us to look at each of the economic proposals of the candidates, and this is what we found: 

Rodolfo Hernandez, candidate for the League of Anti-Corruption Leaders

Rodolfo Hernández, former mayor of Bucaramanga, has argued that it is necessary to undertake a reform to face the pension crisis which, he assured, will not last more than 7 years. In this regard, he says that an in-depth study should be made on, for example, the pension bonuses that are given to those who earn the most and not to the poorest. 

On the other hand, he proposes to implement a tax adjustment to lower the burden of Colombians, he says to reduce VAT from 19% to 10%, a reform that would result in a greater collection by the DIAN, as he attributes to corruption a tax evasion that would only be reversed with this adjustment. 

Regarding the minimum wage, Hernandez intends to increase salaries to encourage consumption, increase production and employment rates, resulting, the candidate predicts, in 4 or 5 billion additional to the Colombian economy. 

Gustavo Petro, candidate for the Historic Pact

The senator of the Republic and leader of the Historic Pact, conceives his economic proposal aimed at the industrialization of the country; one that seeks to move from an extractive economy to one where the labor economy is based on agrarian modernization and the protection of international trade. 

On the other hand, Petro is examining the possibility of encouraging a nationwide transition from fossil fuel-based energies to renewable energies, a transformation that, he assures, will not be made in 4 years, but which will lay the foundations for new social and environmental experiences. 

Regarding salaries, Petro says, salary increases will be the result of the transforming process of the country's industry, and adds that rents must be lowered to make money work. Speaking to Forbes Colombia he said: "Currently, the country has 15 million fertile hectares that can be expanded to 22 million. However, only five million are being used today".

Federico Gutiérrez, candidate for Team for Colombia

Federico Guitiérrez, former mayor of Medellín, proposes to address the life and well-being of the communities by promoting the economic growth of the regions with an infrastructure that allows the country's farmers to trade their products. He will seek to increase business value by supporting entrepreneurship, investment and internalization with free trade agreements that encourage the local economy. 

His government will promote a tax reform that will generate 1.2 points of the GDP, about 12 billion per year. This will be done by facing the crisis caused by Covid-19 with a fiscal policy that takes care of finances and social programs. 

Environmental policy is also one of his priorities. He will seek to meet the world's demands in terms of protecting forests and waterways, while encouraging agriculture, industry, construction, commerce and services, which account for up to 83% of national employment.

Sergio Fajardo, candidate for the Centro Esperanza Coalition

Sergio Fajardo, former mayor of Medellin and former governor of Antioquia, intends to reduce the labor gap between men and women, and for that he seeks to encourage the leading role of women by creating the Ministry of Women. He says that Colombia needs a labor reform where the national movement revolves around employment. 

Another of his main focuses will be to encourage youth employment by creating the figure of Green Employment, where young recent graduates do their internships associated with green economies, that is, young people in territories that encourage the bioeconomy and renewable energy. 

The education of the territory will be fundamental in his government plan because Colombia, says Fajardo, has a productive vocation. 

The National Registrar of Civil Status, Alexander Vega Rocha, announced this May 22 the opening of the presidential elections abroad, and said that these elections cannot be suspended, postponed or canceled for any reason. Meanwhile, on Sunday, May 29, the presidential elections will be held throughout the national territory from 8:00 a.m. to 4:00 p.m. in order to choose the next president and vice-president of the nation.

Diego Prieto
Press Officer

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