The Economist: Colombia’s leftist president is flailing
His attempts at reform are increasingly infuriating Colombians
Colombia’s first avowedly left-wing president came to power in August 2022 promising to reduce inequality in one of the world’s most unequal countries. Since taking office Gustavo Petro has been pushing through a series of reforms in pursuit of this goal. In particular, Mr Petro wants changes to health care, labour and the pension system.
But almost two years into his term, the bills underpinning his signature reforms have stalled. There is opposition in Congress and on the streets. Mr Petro is losing patience. He is pressing Congress to pass the laws before the end of the legislative session on June 20th. His moderate allies are attempting to rein him in, lest his intransigence push his approval below the 34% it has been stuck at for months.
Mr Petro’s reforms are not created equal. Start with the pension system. Most politicians agree that it needs to be overhauled. Just a quarter of elderly Colombians get a pension. The targeting of spending is bizarre. Almost three-quarters of it goes to rich households, whose members tend to opt for a publicly funded defined-benefit system which provides annual payments of up to 80% of their end-of-career average salary. The oecd notes that Colombia is the only country in Latin America with a pension system that increases inequality.
The reform aims to expand coverage to almost the entire retirement-age population, according to an imf analysis published in March. To help pay for this some 80% of all future pension contributions would be directed towards public rather than private schemes, and more people would make obligatory contributions. Nonetheless many fear the new model will become unaffordable. It could also deplete the size and health of private pension schemes which are the country’s main savings vehicles and play a big role in its financial system.
From pragmatist to populist
Gloria Inés Ramírez, Colombia’s labour minister, says the pension reform is likely to pass because the government has “prioritised dialogue and listening”. The upper house approved a modified version of the bill in April, and the lower house began debating it for the last time on June 11th.
Such compromise has been lacking in health care. Colombians are fond of their country’s mixed public-private system. In 1993, when it was established, only a quarter of them had access to health care. Today 95% do. The portion of the cost of care that is paid for by individuals is among the lowest in the world. Yet in April 2023 Mr Petro presented a proposal to transform the role of private insurers in the health-care system, handing control of the public funds which they currently administer to the state. He duly sacked moderates in his cabinet who opposed the plan.
Many Colombians are outraged. Hundreds of thousands of them took to the streets in April to protest against the reform. Congress blocked the bill. Since then, the country’s biggest insurers have accused the government of refusing to increase the contribution it makes in line with rising health-care costs. This is running them out of business. The same week that Congress blocked the reform, Supersalud, the body which regulates private insurers, took control of the two largest firms, eps Sanitas and Nueva eps. Luis Carlos Leal, the head of Supersalud, breezily calls the timing “a coincidence of life”.
The labour reform is being pushed through simultaneously. The proposal provides boons for salaried workers, such as increased overtime pay and longer contracts, while casual workers would be guaranteed social security. The lower house began debating the bill on June 11th. As The Economist went to press, legislators had approved just under half of the bill’s articles, but it is unlikely to become law while they are still working on pensions.
Mr Petro is trying harder to rally his base. In March he called for a constituent assembly to rewrite the country’s charter, but he has since backtracked. After the April protests he accused the opposition of plotting a “soft coup” and called for a massive counter-march.
The polarisation is spooking investors. According to Fedesarrollo, a think-tank in Bogotá, Colombia’s capital, the purchase of physical assets has plunged to its lowest level as a proportion of gdp since 2005. Growth has also been sluggish. Tax collection fell by 10% in the first four months of 2024 compared with the same period the previous year. On June 6th the finance minister temporarily blocked new spending for public projects.
Running out of road
Violence and corruption scandals are eroding what political capital the government has left. Shoot-outs and kidnappings are increasing in the country’s south, undermining Mr Petro’s campaign promise to bring “total peace”. The former head of the disaster-risk-management agency and other officials are being investigated for allegedly handing out bribes via inflated public-works contracts in La Guajira, a destitute region Mr Petro pledged to help.
Almost halfway into his term Mr Petro is trying to deliver his agenda by becoming more combative. But he needs to negotiate with Congress and placate protesters in order to successfully reform Colombia’s welfare system. That requires less populism and more pragmatism.
