Colombia’s president Ivan Duque and his finance minister don’t seem to know what to do after the court struck down last year’s budget finance plan.
The Constitutional Court sunk the budget financing on Wednesday after finding it had not been duly approved by Congress in December last year.
Luckily for Duque and Finance Minister Alberto Carrasquilla, the court gave the government until December 31 to present a new plan, maintaining the tax reforms included in the plan for 2019.
Who does what?
Following the ruling, the president took to national television and ordered Carrasquilla to present “as quickly as possible a bill containing all the benefits, mechanisms and rules contained in the law” that was sunk.
In a press conference, the finance minister said Thursday that Duque ought to decide when to present the bill to congress, which goes on a three-month leave on December 16.
Why the two disagree on how to proceed is a mystery; experts have been warning that the court would sink the finance plan for weeks.
“We’re making photocopies”
While behind closed doors the government figures out how to proceed, Carrasquilla said that “we will bring an identical text [to Congress] as approved” last year. “We’re making photocopies,” the minister said.
Contrary to the administration officials, Colombia’s market remained calm. The Colcap index closed only 0.06% lower than yesterday and the peso remained stable.
Without making an announcement on the presentation of the finance bill to Congress, Duque urged at a public event congressmen not to “play politics with the economy” in the two months before going on recess.
Both the president and the finance minister claimed that the tax reform included in the finance plan has so far benefited the economy.
Tax hikes to Congress two weeks before elections
When introduced, the budget finance plan plummeted Duque’s approval rating because it included controversial corporate tax cuts and lowered the threshold for income tax.
The reopening of the debate is a disaster for the president as every unpopular tax measure will again be open to debate, which could sink his approval rating even lower.
To make matters worse, Carrasquilla’s 2020 budget was approved hours before the court ruling but is left without financing.
And to make matters even worse, the ongoing trade war between the United States and China that began after the approval of the finance plan has severely changed the fiscal reality.
With local elections set to be held in two weeks, lawmakers that previously agreed to unpopular measures may change their mind to appease the electorate.
This makes a swift approval of the 2020 budget and the budget finance plan all but certain.