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 1.4% in early trading on Wednesday, leading losses among major currencies, while the nation’s dollar bonds paced declines in a Bloomberg index of emerging-market sovereign debt. Notes due in 2051 and 2042 were the worst performers, down 1.6 cent on the dollar.
On Tuesday night, Petro asked his ministers to resign ahead of a likely reshuffle. Jose Antonio 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. Analysts at Citigroup said Ocampo is unlikely to leave the cabinet.
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 reshuffle comes after lawmakers removed 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.
While Ocampo is likely to stay, the break in the government’s coalition will further harm its ability to pass far-reaching reforms, according to Citigroup.
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.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.