The Colombian Central Bank and Fedesarrollo warned a new tax reform could be needed to finance $10.2 bn of the $84 bn in revenue that the Government expects in 2021. “Returning to the goals of the fiscal rule by 2022 will depend on the approval of fiscal reform to generate additional structural income for 2% of GDP,” the Central Bank said.
The most recent economic log of the National Trade Federation (Fenalco) revealed that retail sales continued in a negative trend. Only 14% of the businesses in the sector reported an increase in the volume of their sales, whilst 65% reported a decrease. The drop in sales is due to the reduction in household income, the lack of the traditional mid-year school season and the higher cost of consumer credit.
Ecopetrol reported that it will prepay the short-term obligations with local and international banks signed in March and April 2020, in the form of trade finance instruments and short-term bank loans. The total principal repayment to be prepaid amounts to $ 208 MM (local debt) and $ 221.5 MM (international debt), plus accrued interest.
The Institute of Hydrology and Environmental Studies (Ideam) warns of a 75% probability of a 'La Niña' phenomenon in the last months of 2020, with an estimated 40 to 60% increase in rainfall in the northern and central regions of the country. La Niña could produce torrential rains and flooding, landslides, gales, and hailstorms, affecting the agricultural sector, road infrastructure, housing, water and sanitation, among other sectors. Heavy rains in 2010 and 2011 resulted in floods that cost and estimated $6 billion in damages to infrastructure, agriculture and housing and social services.
The Colombian government announced that the Formal Employment Support Programme initially extended until December 2020, is expected to continue towards the first quarter of 2021. The programme subsidizes 40% of the minimum wage in those companies that have seen their cash flow affected by more than 20%. The cost of the first stage has exceeded $800 MM, benefitting more than three million jobs.
Under the new regulatory sandbox rules, fintech ventures can formally test their technological developments in real market conditions, although with limitations in terms of audience and time. In the last five years, fintech companies have grown 75% annually in Colombia, placing third in the region after Mexico and Brazil. According to Érick Rincón, president of Colombia Fintech, “in the coming years we expect new technologies such as blockchain and big data to take hold in the Colombian fintech market, which requires differential regulation.