Colombia doubles down on shift away from oil and mining

Colombia wants to restore industries such as textiles, fertilisers and metalworking as it seeks to cut its account deficit and wean the country off oil and mining, Bogotá’s new finance minister said.

Ricardo Bonilla, who took office this month, also cited pharmaceuticals manufacturing as an area Colombia wanted to develop.

“We are very interested in foreign investment that is not so concentrated in oil and coal but in industry.

“We have to rebuild the industrial apparatus to be able to have that production in Colombia . . . That does not mean that we do not buy goods but that we want the possibility of a more equal exchange.

“Colombia’s performance has been deficient [in recent decades] due to the conviction that it was more important for Colombians to consume cheap imported products than for us to try to produce them.”

President Gustavo Petro, a former member of a guerrilla group and Colombia’s first leftist leader, was elected last year promising social reforms and a shift away from oil, gas and mining, though these account for half of the country’s exports. Since then he has bristled against moderates in his government and congress, as well as businesses, and called on supporters to take to the streets to support his reforms.

Bonilla took office on May 1 following a cabinet reshuffle in which seven ministers lost their jobs. He previously served as finance secretary under Petro when the latter was mayor of Bogotá.

Bonilla replaced José Antonio Ocampo, a renowned professor of economics at Columbia University in New York, who in the 1990s served as finance minister and agriculture minister. Ocampo also previously worked at the United Nations and the central bank.

Ocampo was seen as a moderate buttress against an increasingly radical president and on several occasions walked back statements from cabinet members, such as when Irene Vélez-Torres, mining minister, promised a halt to new oil exploration projects.

Some analysts suggest Bonilla will be less able — or willing — to restrain Petro’s most extreme instincts. A note from Citibank following Ocampo’s ouster called Bonilla “more ideological” than his predecessor and said any reforms would be harder to pass thanks to a “left-leaning shift” in cabinet.

Bonilla, who said he was committed to reducing Colombia’s fiscal deficit, described his role as providing Petro with accurate information. “He wants to hear the truth, with real data and no sweet-talking.” 

Colombia is Latin America’s fourth-largest economy, and gross domestic product grew by 7.5 percentage points last year, but that growth has slowed sharply amid a broader slowdown, while inflation is running at an annual 13 per cent.

Petro’s previous coalition in congress fell apart as he struggled to pass a health reform bill that would drastically increase the state’s role in healthcare. At that time Petro said he would “build a new cabinet that will help consolidate the government programme”.

Bonilla said: “Governance has always been the order of the day. The concern over recent days is how to rebuild a parliamentary alliance that will move the [reform] projects forward.”

A report by rating agency Moody’s published on Monday found that while Colombia’s strong institutions limit the government’s ability for radical upheaval, “a deterioration in business sentiment” risks hurting investment and potential GDP growth.