Former finance minister Jose Antonio Ocampo, with his extensive experience in charge of state finances, is determined to do what the government needs to do to revive the economy.
The first is to accelerate spending on infrastructure, particularly in social housing and road construction, to reduce interest rates and at the same time boost the country’s non-traditional exports, creating jobs.
Also, Ocampo believes that the increase in the minimum wage should not be exaggerated since the productivity index cannot be taken into account. He says that the reforms the government is pushing today and the reforms that have already begun to be debated in Congress should be agreed upon and pension reform will move forward more easily.
New Century: What is your opinion, or recipe for what needs to be done to reactivate the economy, that businessmen have proposed as shock measures?
Jose Antonio Ocampo: Well, in all my statements I have talked about the need for three measures or policies. One is to reduce interest rates and implement more public spending, especially transport infrastructure and social housing to create jobs, and the third is to develop a more aggressive non-export policy. It will be a component of reviving the economy.
I repeat, low interest, high employment and increase in non-traditional exports, these are the elements that need to be improved to prevent the economy from continuing to decline and, on the contrary, to reactivate itself in the short term.
ENS: Do you think inflationary pressures will be higher by the end of the year?
Jao: The effects of lowering interest rates can be strong, especially on the supply side. But what they can do is keep inflation as it has been up until now, which has been a bit slower than we would like.
ENS: The Bank of the Republic has not cut interest rates, but do you think these cuts will happen before the end of the year?
Jao: Yes, I think so, and even though they don’t want to cut them right now, I believe they will next month, and I believe there will be room for inflation and demand to reactivate.
ENS: At this point in the year, talk of raising the minimum wage for next year has already begun. What is your position on that increase?
Jao: Of course, inflation and productivity must be taken into account. But there is no doubt that there will be no increase in production this year. So what is taken into account is inflation and, moreover, as employment is increasing, we must be careful how far this increase in the minimum wage can go, which is certainly expected by millions of Colombians.
ENS: From your perspective, how do you analyze the behavior of the economy?
Jao: The economy is practically at a standstill and shrinking sectors such as industry, construction and trade are underdeveloped, but undoubtedly the most important issue is, obviously, inflation, which has fallen to a low rate and is still there. distributional effects. What I’m saying is that monetary policy has slowed the economy along with demand, but there are also supply issues, issues related to the whole ecosystem. Of course, there are problems with increasing the price of petrol to reduce the deficit in relation to the market price. Now I don’t know what’s going to happen with the booklet usage rates and all that ramifications.
ENS: Regarding what has been clarified by amending the Finance Rule, do you think this can be done?
Jao: Well, look, the director of planning said he was misunderstood, and even Finance Minister Ricardo Bonilla bluntly said there was no proposal to change the rule. Also, any plan must go through the Congress of the Republic. Also, I believe the Director of Planning had already clarified what he meant by what he said. That is, there is no such proposal or they do not want to take into account what is being done on environmental issues. Also, it creates more deficit and increases debt. This creates a negative effect on the government financing markets. What’s more, at some point I told President Pedro that any suggestion of a fiscal regime would be dangerous for Colombia in international markets.
ENS: In your opinion, what should the government do to advance social reforms such as labor, pension and health reforms? Do I need to negotiate further with the businessmen?
Jao: Of course, obviously, you have to talk with all sectors, with the private sector, about issues that are within the competence of each sector, but ultimately it is the political agreement that will allow you to pass reforms.
ENS: Among the reforms proposed by the government, which do you think can be easily rolled out?
Jao: Undoubtedly, in relation to pensions, I believe that much progress has already been made in that respect. The health issue requires lots and lots of effort and not to mention the work issue, which is difficult for me. Ah, but they also proposed educational reform, but they also had to agree with the universities. The Colombian higher education system has many private universities to expand academic security.
ENS: How can you appreciate today that in the daily life of Colombians, it is very difficult for them to sustain themselves because the cost of living is high and everything is very expensive?
Jao: Well, look, I don’t think there’s a reduction in people’s real wages, it’s really weighed on some of the more expensive products. But, however, there is no evidence of reduction in these salaries, rather these actual salaries are adjusted due to cost of living. But workers’ incomes are rising at or above inflation.
Petrol and toll booths
Former finance minister Jose Antonio Ocampo asked the government of Gustavo Pedro to raise the price of tolls across the country, which were frozen until 2023. Ocampo made the request as an alternative to providing gasoline subsidies for taxi drivers. Contract to meet the expenses they consider.
Ocampo is concerned that the Fuel Price Stabilization Fund or resources in the 2024 General Budget will be used to finance the subsidy.
The former minister’s idea has already been analyzed by the national government. Even Transportation Minister William Camargo indicated the move may be necessary to stem a growing funding gap. According to official estimates, the toll charges have cost the country about $800,000 million.
Along the same lines, the Colombian Infrastructure Chamber estimates that the financial cost of freezing toll prices in the coming years will be $13.8 billion.
Another proposal by Ocampo to subsidize gasoline for taxi drivers is to increase the fares of the rides so that the resources come from those who use those modes of transportation.
The former minister said, “The sanction for expenditure is excessive and I would have opposed it. For example, that subsidy for taxis is ridiculous to me. Taxi fare should be increased. It is a specific case. Toll booths (…), let the toll booths increase. Additionally, they are important for investment and infrastructure,” he said.