Colombia’s finance chief has been hit with fresh accusations in an alleged corruption scandal, adding to complications for President Gustavo Petro just as the government tries to navigate a deepening fiscal crisis, Bloomberg News reported. Finance Minister Ricardo Bonilla, who has just a month to secure approval for higher taxes meant to cover a 12 trillion peso ($2.7 billion) shortfall in next year’s budget, is now facing significant opposition in Congress, with lawmakers calling for his resignation.
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Colombia
Colombian lawmakers have lifted some restrictions on government spending in a controversial decentralization bill that’s already stoked concern among investors, Bloomberg News reported. The constitutional committee of Colombia’s lower house removed a requirement that the bill, which aims to transfer as much as 39.5% of central government revenue to regional authorities by 2039, must align with the government’s mid-term fiscal framework.
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Colombia’s central bank ignored pressure to accelerate the pace of interest rate cuts as policymakers weigh fiscal risks that sent the peso to its weakest level in more than a year, Bloomberg News reported. The seven-member board voted 4-3 to lower the benchmark rate by half a percentage point to 9.75%, Governor Leonardo Villar told reporters in Bogota on Thursday. The minority voted for a bigger reduction, to 9.5%.
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Colombia sold $3.64 billion of dollar bonds on Monday, tapping international debt markets for the first time in almost seven months, Bloomberg News reported. The South American country sold $2 billion in notes maturing in 2036 and $1.64 billion in bonds due in 2054 to yield 7.8% and 8,5%, respectively, tighter than initial price talks of 8.15% and 8.8%. Citigroup, Itau BBA and SMBC Nikko are handling the deal, according to a filing. Proceeds will be used for general budgetary purposes and to buy back up to all of Colombia’s notes maturing in 2026 and 2027, the filing shows.
The number of companies in Colombia filing for insolvency this year is on track to reach its highest level in a decade, heaping pressure on President Gustavo Petro to pull the country out of its economic doldrums, Bloomberg News reported. The surge in financially distressed firms is being driven by a sharp contraction in the construction industry, one of the nation’s biggest employers, that’s partly a result of a housing subsidy overhaul by Petro’s own government. Economists worry that ripple effects from businesses shutting down will hold back growth in the broader economy.
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Colombia’s central bank cut borrowing costs to a two-year low while ignoring President Gustavo Petro’s calls for an even bigger reduction. The board also elected Governor Leonardo Villar for a second four-year term, Bloomberg News reported. The board split once more as it lowered its benchmark rate by half a percentage point to 10.25%, Villar told reporters on Monday. The move was correctly forecast by 20 of 27 economists in a Bloomberg survey, while the others expected a deeper cut, to 10%.
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