Colombia ‘s finance minister began preparing the 2021 budget weeks before the coronavirus pandemic is projected to reach its peak and all kinds of things can still go wrong.
Finance Minister Alberto Carrasquilla has no choice. The constitution obliges him to have a first draft of what would be the coronavirus recovery budget before the end of July. Congress then has until the end of October to approve the budget.
What is certain is that both oil and tax revenue that finance much of the budget are gone and that Carrasquilla will be forced to plunge the country into an unprecedented debt in order to even have a government.
The problem of the uncertainties
The problems lie with the uncertainties that are still ahead as the coronavirus is only at a third of its strength, and the pandemic’s peak is not projected until the end of August.
Before the end of October, between 20,000 or 80,000 people will have died of COVID-19, according to the Washington University. The National Health Institute projects 41,000 deaths before the end of the year.
For months, the pandemic will maintain the strength to knock down much of Colombia’s healthcare system. The possible cascade effect of this on other state institutions is unpredictable.
The poverty caused by the mind-boggling increase in unemployment will lead to major unrest, especially after the lifting of an eviction ban on August 31. However, whether this will result in a major increase in crime, uprisings or a reignited armed conflict is also impossible to predict.
In Bogota alone, 20% of the police force has already been temporarily eliminated because their attempts to enforce the law got them either infected or quarantined, according to Bogota Mayor Claudia Lopez.
One can only guess what the effects are in the military as the the defense minister wisely keeps this to himself.
Stabilization and recovery
The Government and Congress will have to decide on how to recover from Colombia’s worst economic crash in history before having had the chance the stabilize the situation.
Even the best government in the history of humanity could only do wrong under those circumstances.
The progressive Mayor of Bogota and Conservative Party mogul Juan Camilo Restrepo have been talking respectively about “a WWII Scenaro” and “a Criollo New Deal,” without daring to go into specifics.
Also the United Nations’ Economic Commission on Latin America and the Caribbean seems to agree that neo-liberal economics is dead and a 21st-century version of Keynesian economics is necessary to recover from the crash.
The thing is that to the best of my knowledge this 21st century version of Keynesian economics does not exist and I do not believe Colombia’s Government and Congress will be able to invent one before October.
Starting a debate on a coronavirus recovery can’t begin soon enough, but this will be an issue in the 2022 budget debates and only if President Ivan Duque is able to stabilize the situation.