When Colombia's central bank chief, Juan Jose Echavarria, was asked what ke...
BOGOTA - When Colombia’s central bank chief, Juan Jose Echavarria, was asked what kept him up at night with inflation low and economic growth rebounding, his answer brought a stinging rebuke from the government and stirred a debate about the solidity of the country’s recovery.
Finance Minister Alberto Carrasquilla shot back that Echavarria should keep such opinions private and stick to monetary policy. Echavarria’s remarks led to weeks of testy exchanges with the center-right government, including President Ivan Duque himself. Carrasquilla and Duque responded by defending the government’s management of Colombia’s oil-reliant economy, which grew at an annual clip of 2.8% in the first quarter.
“It does have an impact,” David Bojanini, head of Grupo Sura, the nation’s biggest investment holding, said on RCN radio. “When the environment of the day is so convulsed, we get distracted and that generates consumer distrust and a decline in investment.” Moody’s sovereign risk analyst Renzo Merino, who has a “Baa2” rating on Colombia with a stable outlook, said that while political noise is a regional phenomenon, in Colombia it is weakening confidence and hindering the reforms needed to improve the fiscal situation.
Some analysts point to the strength of Colombian bond prices and the peso and rule out polarization impacting Colombian capital markets because the economy enjoys better growth prospects and offers better returns than most countries in the region.
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