IOU: The Uribe administration and future budget expenditures

With the presidential election at our doorstep, there has been much talk about the inheritance that the Uribe administration is leaving to the next president. If you read any Colombian newspaper now, you would think that the word ‘scandal’ summarizes this inheritance perfectly. The DAS wiretapping case is getting uglier, as more truths are revealed, and the possibility that the espionage was ordered from within the presidential palace materializes. Sabas Pretelt de la Vega, a former Minister of Interior, has been called to trial for bribing a congresswoman into voting in favor of President Uribe’s first reelection. The Supreme Court started a preliminary investigation into an alleged fraud in the congressional election last March.

Oh, it is going to be an interesting next few months. But there is something else that the new government will inherit from the Uribe administration. And so will the government after that one, and the next, and the one after that… The Uribe presidency wants to make sure that nobody in the next decade or two forgets who was living at Casa de Nariño at the beginning of the century. The inheritance I am talking about is the 26.4 trillion pesos (US$13.6 billion) that will have to be spent between 2011 and 2027 in different infrastructure projects. The Uribe administration signed a number of concessions for the following fifteen years, which means that the next four governments will be paying the bill.

Those who dislike President Uribe see this as a never-ending curse. They won’t even be able to get rid entirely of their nemesis for another decade and a half. They are infuriated that this government they despise has promised money to some big corporations when they won’t even be in power anymore. For others, this goes against the very concept of democracy, and they argue that the current government has no right to “tie the hands” of future administrations in budgetary matters. Paraphrasing a friend of mine, who is not too fond of Mr. Uribe, the appearance this all gives is that the next president will not be able to do much given these financial commitments.

Of course, all that is nonsense, and a gross exaggeration, to say the least. Defending the Uribe administration has fallen out of fashion, but I am going to do a little bit of that in the following lines. You have to be very gullible to believe that a mere 26.4 trillion pesos in the next fifteen years will leave future governments with no room for maneuver. All that money, spent until 2027, gives an average of 1.76 trillion per year, which is about 1.1 percent of the 2010 budget of the central government. Knowing that, I am pretty confident that whoever wins the presidency has little to fear from these financial commitments.

Those who disagree will point out that 5 billion are due next year already. In 2011, the new government will have to spend about a fifth of its investment budget (which amounts to 25 trillion pesos, more or less) in commitments taken by the Uribe administration. Let me point out that the new government will still have plenty of command over the other four fifths of the investment budget. Moreover, there is something that the Uribe critics do not want to bring up. The infrastructure projects that the Uribe administration authorized are very important for the Colombia’s development. The bulk of those 26.4 trillion will not be spent on petty things, but on 6,600 kilometers of highways and roads, a metro system for Bogota, and public transportation projects for smaller cities like Sincelejo, Montería and Valledupar.

In Colombia, infrastructure projects like those take decades to be planned and executed, if they are ever carried out. Bogotans have been promised a metro system for more than thirty years now. By committing to these future expenditures, the Uribe administration is giving a green light to these projects, providing them with the financial foundation that they need. If the government had been unable to commit those resources, by 2027 Colombia would remain as infrastructure-starved as it is today.

But the critics will also point out that what the Uribe administration has only been seeking political goodwill by spending money that will never be theirs. That is fiscally irresponsible and morally reprehensible, from their point of view. Just let me say two things about that. Years from now, when all those highways and the metro system are finished, it will be the incumbent administration of the time who will take all the credit. Nobody is going to remember that it was the Uribe presidency that started those projects. And if somebody remembers, the incumbent politicians are going to make sure that they forget about it totally with those heartfelt speeches they will give during the inauguration ceremonies. The politicians of the future will get the credit for the political will that the Uribe administration has shown by signing on to these projects.

Now, let me say something about the supposed fiscal irresponsibility in all this. The part of the story that the critics are not telling is that economic activity (and hence, government revenue) would increase as a consequence of these projects. More and better roads, and cities with well-developed transportation systems will help Colombians buy and sell, produce and deliver goods faster. Those projects will grease the rusty cogs of the country’s economy. Am I the only one who has the crazy idea that tax revenue could actually go up as a result of better infrastructure? Plus, all those construction projects will create jobs –and I bet that future governments will not be complaining about those workers not being part of the unemployment statistics.

Decades from now, when Bogota has a metro system, and when those narrow roads that link Colombia’s cities are a thing of the past, few will recall that it was the Uribe administration who first decided to commit to their construction. By then, others will have taken the credit. For now, the Uribe government only gets the attacks.

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