Gustavo Petro chooses a renowned economist as Minister of Finance, in a nod to the markets

The elected president of Colombia, Gustavo Petroannounced on Thursday as his finance minister José Antonio Ocampo, a doctor in economics from Yale University.

This is the most anticipated appointment by the markets and the unions in the face of the uncertainty involved in the election of the first left-wing president in the country, who promised changes in its economy.

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Petro made the announcement on his Twitter social network account, in which he argued that with Ocampo it will “build a productive economy and an economy for life”.

Ocampo, 69, is a renowned economist who has held high positions in the United Nations. Between 2003 and 2007 he was Under-Secretary-General for Economic and Social Affairs appointed by the body’s late Secretary-General, Kofi Annan.

Jose Antonio Ocampo will be our finance minister. Build a productive economy and an economy for life. pic.twitter.com/Hn1f0AQ9NY

– Gustavo Petro (@petrogustavo) June 30, 2022

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The business and banking associations have reacted positively to the appointment, ensuring that it provides confidence on the technical nature of macroeconomic policy.

“This is without a doubt a very good sign, from a person who knows the Colombian economy, public finances, one of the most important economists in Latin America and a reliable and reasonable person”assured Bruce Mac Master, president of the National Association of Entrepreneurs of Colombia (ANDI) in a message sent to the press.

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Ocampo’s efforts in matters of public finances and monetary policy would reassure both businessmen as well as credit and exchange market operators, Isidro Hernández, research professor at the Externado University School of Economics, told The Associated Press.

A couple of days after the victory of Petro an increase in the dollar that exceeded the barrier of 4,100 pesos was broken, approaching its historical maximum of 4,153 pesos in March 2020. The shares of the state oil company Ecopetrol also fell due to the fact that Petro highlighted in the campaign to accelerate the energy transition and suspend new oil exploration licenses.

Hernández explained that a good part of the lost value in the oil company’s shares has already been recovered. “90% of Ecopetrol belongs to the State, so it was not in shareholder danger, they were somewhat speculative adjustment movements given the political situation.”

The future Minister of Finance was until 2020 co-director of the Bank of the Republic, the monetary authority, which gives him experience to face one of the country’s current challenges: inflation.

Although the growth of the Colombian GDP in 2021 was 10.6%, the highest in more than four decades, and the country has achieved a good recovery after the pandemic, Colombia does not escape inflation and the increase in the food prices while wages remain unchanged.

For the doctor in Economy Jorge Iván González, the minister Ocampo must “fight against inflation through instruments other than the increase in the interest rate”, he told AP. The Banco de la República raised its interest rates to 6% in April and will decide in the coming days whether to adjust them again.

Ocampo He knows well the operation of the Treasury portfolio, he directed it during the government of the liberal Ernesto Samper until 1998, the year in which he was appointed executive secretary of the Economic Commission for Latin America and the Caribbean (ECLAC).

In a new political reality, he will take on the challenge of carrying out an ambitious tax reform which, as he has said Petrowould imply increasing taxes on wealth, dividends and reducing tax benefits to finance social programs that are promised in the campaign and that lead to reducing inequality, such as delivering a new pension bonus to three million older adults and guaranteeing free higher education.

Ocampo has been close to left and center politicians in the region. Last year he built a letter to support the then Chilean candidate Gabriel Boric, who was the predecessor. In the Colombian electoral campaign he advised the center candidate Sergio Fajardo and not Petro, however, after his victory he managed to lead the economic connection team and the ministry.

In recent days, Ocampo made an analysis of the economic panorama and the challenges in the Petro government that he will now assume, among which he recognized the need for a structural tax reform. “Given the high deficits of the national government and public debt, which converge to be among the highest in history, it will be necessary to make a fiscal adjustment of about three points of GDP (Gross Domestic Product), in accordance with the fiscal rule. But given the immense social demands, it is necessary to permanently finance greater public social spending, ”he wrote for the newspaper El Espectador.

The president-elect is still setting up his cabinet. In addition to Ocampohas announced that Vice President Francia Márquez will head a new Ministry of Equality and the conservative Álvaro Leyva Durán will head the chancellery.

Source: Elcomercio

Ronald Payne

I, Ronald Payne, am a journalist and author who dedicated his life to telling the stories that need to be said. I have over 7 years of experience as a reporter and editor, covering everything from politics to business to crime.