Colombian assets dropped as President Gustavo Petro prepares a cabinet shakeup following a series of legislative setbacks that he said represented the disintegration of his ruling coalition.
(Bloomberg) — Colombian assets dropped as President Gustavo Petro prepares a cabinet shakeup following a series of legislative setbacks that he said represented the disintegration of his ruling coalition.
The peso weakened as much as 1.8% before paring the decline amid expectations that Finance Minister Jose Antonio Ocampo would stay on. Dollar bonds from the South American nation were among the worst performers in emerging markets, with notes due in 2041 sinking as much as 1.8 cents to 79 cents on the dollar, according to indicative pricing data compiled by Bloomberg.
On Tuesday night, Petro asked his ministers to resign ahead of a likely reshuffle. Ocampo, the market-friendly finance minister, said in written reply to questions that he will comply with Petro’s request, conforming with protocol, and will await the president’s decision.
Ocampo told his team he expects to remain in his role during a meeting earlier today, according to a person familiar with the matter.
Colombia’s first leftist president is attempting to overhaul the nation’s economic model by boosting worker rights and increasing the state’s role in health care and pension provision. But his majority coalition has fractured and he has faced stiff opposition, including from allies in congress and even from members of his own cabinet.
The upcoming reshuffle follows a decision by lawmakers to remove an article in Petro’s development plan that would allow the government to buy land for farmers as part of a peace deal with illegal armed groups. The president said his governing coalition had ended.
“We have to install a government of emergency, given that congress wasn’t capable of approving some simple articles, very peaceful, that would have enabled more democratic use of land,” Petro said, in a speech in the southwest of the country.
Such a government “doesn’t imply an emergency decree, but means that government workers labor hard, day and night, every day, to achieve our objectives,” he said.
XP Investments strategist Andres Pardo said the president’s use of the term “emergency government” could mean the administration will radicalize as Petro surrounds himself with loyalists.
Read more: Leftist Colombia Government Suffers First Big Defeat in Congress
Also on Tuesday night, a congressional commission approved the text of a health bill that will be voted on following debates in both chambers. However, several key groups in congress, including Liberals, Conservatives, and the U Party ordered their members not to back the government-proposed initiative, in another blow for Petro.
In posts on Twitter, Petro attacked lawmakers “who have enriched themselves on public money.”
–With assistance from Andrea Jaramillo, Maria Elena Vizcaino and Ezra Fieser.
(Updates starting with market data in the second paragraph)
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