The Government will seek to have more banks join the reduction of interest rates and financial relief for families and businesses affected by the recent earthquake that struck the country, while it will begin to reveal the outlines of the fiscal adjustment with which it intends to organize public finances.
These are two of the main messages the Executive brings to the close of the 60th Banking Convention in Cartagena, as anticipated by the Vice President of the Republic, José Manuel Restrepo, before his intervention at the financial sector meeting.
Restrepo pointed out that one of the purposes of the Government’s presence at the Convention is to deepen the work that several entities have already been doing to reduce rates and facilitate the economic recovery of the areas hit by the earthquake, especially in Chocó, Valle del Cauca, Risaralda, and Quindío.
“The commitment to come here to meet with the financial system is to delve into that task that the financial system has been developing of lowering interest rates to help the sectors affected as a result of the earthquake to move forward in this process of reconstruction and economic reactivation,” he said.
The vice president highlighted the measures already announced by Bancolombia, Davivienda, Grupo Aval, and at least eight other banks in recent days, but made it clear that the Executive’s intention is for the response to extend to a greater number of entities.
“I want to thank the efforts already publicly expressed by Bancolombia, Davivienda, and Grupo Aval and invite the rest of the financial system to do the same in this task,” he added.
The message comes at a time when financial entities have begun to deploy various support schemes for those affected, including relief on existing obligations, special financing conditions, and resources aimed at supporting the recovery of families and productive activities in the affected regions.
The upcoming fiscal adjustment
But the earthquake is not the only economic issue the Government brings to the close of the Convention. Restrepo anticipated that the Minister of Finance, Miguel Gómez, will present this Friday the general lines of the fiscal adjustment plan being prepared by President Abelardo de la Espriella’s administration.
“Today, the Minister of Finance will present the lines of what the fiscal adjustment plan means,” said the vice president.
Restrepo linked this adjustment to the Government’s strategy to recover investment and accelerate economic growth. According to him, the Executive wants the financial system to play a central role in financing companies and households and in mobilizing resources towards new investments.
“The commitment is that the financial system has to be the engine through which Colombia grows and grows much more,” he stated.
In the vice president’s view, the country needs to raise its investment levels again to unlock its growth potential. He maintained that in the last four years the ratio between investment and gross domestic product (GDP) reached levels he described as the lowest in more than four decades.
Restrepo assured that the strategy to recover investment must be accompanied by a fiscal responsibility program.
At that point, he launched strong criticisms at the previous administration. According to him, the budget received by the new Government did not fully incorporate obligations related to pensions, health, public officials’ salaries, debt costs and interest, and resources allocated to public universities.
The vice president stated that the first step to address this situation will be to make the state of public accounts transparent, an exercise the Government has called the “budget of truth.”
“The way to face the fiscal adjustment program is to tell Colombians the truth. That is the budget of truth,” he said.
The intervention of Minister Gómez is, therefore, one of the most anticipated at the close of the Banking Convention, as he will have to begin to specify the scope of the fiscal adjustment announced by the Government and the measures with which it will seek to address budgetary pressures while facing the additional costs arising from the emergency caused by the earthquake.