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LatinNews Daily - 27 April 2023

COLOMBIA: Petro announces sweeping cabinet reshuffle

On 26 April, Colombia’s President Gustavo Petro replaced seven cabinet ministers, including finance minister José Antonio Ocampo, in response to a fracturing of his legislative coalition.

Analysis:

The major reshuffle comes at a critical moment for the government’s health reform bill, which has lost the crucial support of the centrist Partido Liberal (PL) – a key pillar in Petro’s broad governing coalition. To some extent, the ousting of key centrists represents a retaliation for the loss of support from traditional parties in congress. But Petro has also sought to mollify those parties by removing the reform’s architect, health minister Carolina Corcho, in a move which may facilitate compromise over the bill.

  • Petro released a statement saying that his cabinet and its proposed reforms had been “rejected by the traditional political leadership and the establishment,” but said that the government remains “committed to always being loyal to the popular mandate we received, and we have decided to build a government to redouble our agenda of social change to benefit the great majority of citizens”.
  • The ministers who were pushed out in the reshuffle are Ocampo (finance), Corcho (health), Alfonso Prada (interior), Cecilia López (agriculture), Arturo Luna (science), Sandra Urrutia (information, communications and technology – ICT), and Guillermo Reyes (transport).
  • Ocampo, the main moderating influence on the Petro administration who forced the president to water down his goals for health reform and the clean energy transition, has been replaced by Ricardo Bonilla, an economist and longstanding Petro ally who worked under the president as finance secretary for Bogotá during Petro’s tenure as mayor of the capital (2012-2015). Ocampo’s departure caused the Colombian peso and bonds to slump, amid fears that Bonilla will not offer the same restraining influence provided by Ocampo.
  • The other ministerial appointments are Luis Fernando Velasco (interior), Guillermo Alfonso Jaramillo (health) Jhenifer Mojica (agriculture), Yesenia Olaya (science), Mauricio Lizcano (ICT), and William Camargo (transport).
  • The reshuffle followed an apparent collapse in Petro’s broad legislative coalition, although it remains to be seen how permanent the rift is between the left-wing president and his centrist allies in the PL and the Partido de la U (PU). Both parties had said that they will not back the government’s health reform bill, slashing its chance of being approved by congress.
  • However, a large number of PL deputies have rejected attempts by the party’s leader, César Gaviria, to marshal them into opposition. Yesterday, 18 of the PL’s 33 deputies in the lower chamber wrote to Gaviria to condemn his threat to impose sanctions on those who vote in favour of the health reform.
  • There are signs that Petro has not given up on building consensus. The removal of Corcho, the most militant proponent of the health reform bill who had argued that it should be withdrawn from congress rather than watered down, will facilitate compromise on the reform.
  • Nevertheless, the overall impression was that Petro’s choices are likely to further complicate efforts to maintain a broad alliance in congress. Former education minister Alejandro Gaviria, another key centrist who was fired in February for his opposition to the health reform, said yesterday that “between the two sides of Petro - the consensus builder that looks for nationwide agreements and the radical with fixed ideas - it is the second that will always win out”.

Looking Ahead: Whilst Bonilla is more ideologically aligned with Petro than Ocampo was, investors will take some comfort from Bonilla’s fiscal restraint during his time as finance secretary for Bogotá, when he brought about a notable reduction in the capital’s debt.

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