Colombia’s incoming finance minister wants fair capitalism

“We want a Western European kind of capitalism,” he claimed. “Not a capitalist program in which the distribution of wealth is among the the most uneven in the planet.”

Ocampo, a Columbia University economist who has led the United Nations Economic Fee for Latin The us, was recently questioned by leftist President-elect Gustavo Petro to provide as his finance minister when the former guerrilla fighter is inaugurated Aug. 7.

In an interview with The Connected Push on Tuesday, Ocampo promised that the Petro administration will be fiscally dependable and keep absent from radical adjustments in financial policy even as it seeks to boost tax revenues.

The new administration will not have a greater part on its individual in congress, so Petro has been functioning fairly correctly to win more than other functions to assist his packages, although he likely will have to compromise.

Ocampo stated Petro’s leftist coalition wants to boost tax assortment by close to $11 billion each and every 12 months by means of a program that would increase the nation’s tax cash flow by all over 25%. He mentioned the included money would go to develop roads in rural spots and to apply training and wellness treatment applications to minimize social and economic inequalities.

That could be a difficult sell. An effort past yr by the recent federal government to raise $8 billion in taxes, mainly from the center course, sparked practically two months of at times violent protests and pressured the finance minister to move down. Eventually, President Ivan Duque handed a extra modest $4 billion tax plan that prevented increasing individual profits taxes.

Petro is hoping to skirt political turmoil by focusing on the incomes of companies and the nation’s wealthiest men and women.

Ocampo stated money taxes would be raised only for the prime 1% of wage earners, which in underdeveloped Colombia suggests anybody generating $2,500 a thirty day period or more. Petro also seeks to revoke tax exemptions given to some corporations under Duque and claims that a tax on prosperity could be reinstated and that some pensions must be topic to taxes.

Ocampo stated he will fulfill with rankings businesses to examine what Colombia can do to boost its position. Last calendar year, Benchmarks & Poor’s and Fitch downgraded Colombia’s bonds to junk position, though Moody’s managed the nations’ credit score rating higher than that. That can make it additional costly to borrow, with yields on Colombian government 10-year bonds leaping to 12% from 7% around the past calendar year.

The Colombian peso is also weakening, getting rid of 15% of its price to the greenback since Petro’s election victory on June 19. Ocampo explained the devaluation has been brought about by fears of a world wide recession and fascination charge hikes in the United States, which have also hit the currencies of other international locations in Latin The us.

The economist extra that even though the administration will look for to increase taxes, it is not arranging to bolster its revenues by boosting oil exploration. He said fracking will be banned owing to its probably negative consequences on the natural environment.

The Colombian state oil organization, Ecopetrol, is currently implementing two fracking projects that are in their initial phases. Earlier this 12 months, the organization mentioned fracking projects could increase 400,000 barrels of oil for each day to Colombia’s output and protected all-natural gasoline reserves for the next 25 decades.

Oil is now Colombia’s top export. But during the presidential campaign, Petro promised to section out dependency on oil and convert to cleaner types of power. He explained that as president he would not approve new exploration contracts.

“We will quit based on oil,” Ocampo stated. “But it will also be a gradual system.”