This week began with the joint announcement by bankers and the Ministry of Finance that an agreement was reached to avoid the much-feared forced investment project that President Gustavo Petro sought to become a reality and replace it with a series of loans aimed at certain sectors of the economy to boost the economic recovery that has been so much requested.
According to what the national leader initially said, the idea was to inject resources into areas such as renewable energy, agriculture, housing and tourism, among others; which were prioritized in the dialogues with the banks, led by Asobancaria, to finally ensure that the Government’s idea was not presented to Congress and to direct the resources by force.
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It should be remembered that forced investments were a highly criticized proposal, as various sectors pointed out that it could lead to higher credit costs, as well as increasing the risk for the financial sector, which manages the savings of millions of Colombians. It had also been said that it was inconvenient and that it would not end up supporting the economic reactivation in an urgent manner.
What does the pact bring?
The Ministry of Finance and Asobancaria explained the details of this agreement, which they called the ‘Credit Pact’, initially stating that it is the result of constructive dialogue between the Government and the private sector to stop the slowdown, but based on sectors of the economy other than those that are usually touched upon. This is in order to generate sustainable development.
Government and Asobancaria.
Private file
In total, there will be an additional $55 billion in credit disbursements to sectors strategic over the next 18 months, during which priority will also be given to the popular economy, which was normally closed to it due to the high risk it represented in credit management, but which will now be taken into account by this agreement.
If we add to this the money that will also go to manufacturing, industry and housing, in total we are talking about $249 billion in credits that will be injected into the country’s economy, to try to put an end to the bad streak that has been seen in data such as the GDP and to leverage the slight recovery that was seen in the last data from the Dane.
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By sectors
To better understand the changes that were made in the allocation of credit In the next year and a half, we can say that, for example, housing went from receiving $31.8 billion to $40.6 billion, or that manufacturing in recent months had $128.2 billion in loans and in the coming years it will go up to $163.4 billion.
However, the three items that draw attention are the agricultural sector, which will go from $26.1 billion to $32.1 billion; as well as the popular economy, which previously had room for $700 billion and will now go up to $4.1 billion. Finally, it can be seen that for tourism, $6.8 billion had previously been allocated and now it has gone up to $8.4 billion.
The Credit Pact combines public and private banking instruments, under market conditions and its execution is expected, as explained by the Ministry of Finance and Asobancaria, will start in September, quickly contributing to economic recovery.
Government and Asobancaria.
Private file
“Although five sectors are prioritized, the rest of the economic activities will also receive more credit. This agreement between the public and private sectors is a novel mechanism for economic planning around strategic sectors,” explained the Ministry of Finance.
Likewise, the bankers added that this agreement “generates certainty to national and foreign investors. There will be no new forced investments in Colombia. The savings of Colombians have never been at risk. The Credit Pact preserves the country’s financial stability.”
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Finally, it is worth highlighting that the agreement has verifiable goals and will have mechanisms for monitoring and inter-institutional coordination. All this in order to guarantee that the resources reach the sectors planned by the Government, but also to protect the stability of the financial sector.
Important steps
The Colombian-American Chamber, AmCham Colombia, recently joined this debate.whose president, María Claudia Lacouture, said that things are still on track and that what was announced helps to maintain economic stability and generate confidence, both in the local market and among investors who would like to arrive.
Economic recovery
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“The agreement between the Government and the financial sector, which will allocate $55 billion in loans for key sectors such as housing, industry, manufacturing, agriculture and tourism, is a step towards the economic reactivation of Colombia in the next year and a half. This efficient injection of resources will energize key sectors, and can also contribute to job creation and the strengthening of sustainable income for Colombian households,” he said.
For Lacouture, what is known about the pact is a clear example of the capacity of dialogue and agreement between the public and private sectors to achieve common objectives; warning that this same example We could continue in the search for other goals that the National Government wants to achieve.
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