Colombia woke up on Monday morning to the prospect of a left-wing government led by former guerrilla Gustavo Petro, following his victory in Sunday’s second-round elections, and which is the first time the country has had a leftist at the helm.
But Petro takes over at a time when Colombian society is deeply divided, and which raises concerns about the prospects for the new government’s success. Petro does have leadership experience however, having served as mayor of the capital Bogotá from 2012-2015.
In his winning speech, Petro offered some clues about his plans for the economy. “Colombia needs to produce in order to redistribute”, and “we are going to develop capitalism in Colombia”, are just some of the phrases he pronounced.
Bloomberg Línea takes a look at some of the doubts, and certainties, surrounding the country’s next president.
Market uncertainty
It is no secret that Petro’s victory has stirred uncertainty in the markets, expressed by trade unions, ratings agencies and market analysts. Tuesday will be decisive as to how the market receives Petro’s election. Prior to the elections, analysts had talked about the Colombian peso reached more than 4,500 or even 5,000 to the US dollar (the current exchange rate is 3,901 pesos to the dollar) if Petro won, especially against the backdrop of a strong dollar and recession warnings in the United States. Similarly, there also exists uncertainty about Petro’s plan to halt new oil exploration projects and reduce coal production, as well as to change the role of the board of directors of the Bank of the Republic (Banrep), and to make profound changes to the country’s pension system. Furthermore, a poll carried out by Bloomberg hints at greater economic volatility in the country.
Awaiting Petro’s economic plans
Trade unions and investors consulted by Bloomberg Línea say they are in standby mode for what the president-elect says. One of the decisions that not only the productive sectors, but also the market, are awaiting in the coming days is who will be Petro’s finance minister. Petro has said that among the long list of candidates for the role are former minister Alejandro Gaviria; Ricardo Bonilla, former finance secretary of Bogotá; José Antonio Ocampo, former director of Banrep and a former minister of finance and agriculture (and who told Bloomberg Línea that he was aligned with former presidential candidate Sergio Fajardo’s campaign); Cecilia López, a former agriculture minister; Carolina Soto, a former director of Banrep and a former vice minister of finance; Alejandro Gaviria, a former minister of health; economist Jorge Garay, and Rudolf Hommes, a former minister, in addition to Jorge Iván González and Luis Fernando Medina.
Petro the candidate vs Petro the president
Another issue that provokes doubt among observers is how much Petro the presidential candidate will resemble the man who takes office on August 7. How much will he moderate his discourse or harden it? Petro’s economic campaign advisor, Ricardo Bonilla, told Bloomberg Línea that, in the first six months of his mandate, the new government will propose a tax reform aimed at making the country’s wealthiest pay more.
Congress and robust institutions
Analysts and trade unions agree that Colombia has strong institutions that can absorb a radical change of government, as is about to occur. In Congress, Petro’s ‘Historical Pact’ coalition does not have a majority, so the new government will have to negotiate with the center and traditional parties’ benches, and which were the big losers in the election, in order to pass Petro’s proposed reforms.
Likewise, the country has a solid judiciary, such as the Constitutional Court, through which the constitutional controls of the decisions made in Congress will be enforced.
What role could Rodolfo Hernández play?
One of the unknowns following Sunday’s election result is what role rival candidate Rodolfo Hernández, who lost out to Petro in the runoff, will play, having garnered more than 10 million votes, more than current President Iván Duque received for his victory. Hernández was the surprise phenomenon in the first round, and who was embraced by the center and the right among those who voted against Petro. Hernández may accept his seat in the Senate and, from there, could lead the opposition to Petro.
Colombia swings to the left, joining a trend in Latin America
The region is no stranger to the discontent expressed by voters with the existing system, discontent that has been exacerbated by the pandemic as the fight against poverty was put on hold and which widened the inequality gap. Poverty rates in Colombia are close to 20 million people, and many analysts believe that Petro’s left-wing discourse has made an impression on a large segment of society. Over the last year a left-wing wave has moved across the continent, with the election of Pedro Castillo in Peru and Gabriel Boric in Chile, while left-wing former president Luiz Inácio Lula da Silva leads the polls ahead of Brazil’s elections in October.
Translated from the Spanish by Adam Critchley