The president of Colombia, Gustavo Petro, publicly admitted that the Colombian State does not have the resources to care for the millions of victims of the armed conflict, for which reason he made the “unorthodox” proposal that they be compensated through bonds from the Bank of the Republic, issuing entity of the South American country.
During his intervention in the plenary session of the National Council for Peace, Reconciliation and Coexistence (CNPRC), last Tuesday, the president raised the difficulties that the Executive has to comply with the compensation of the victims, a comprehensive reparation measure assigned by the State to compensate those who suffered victimizing acts, according to the Unit for Comprehensive Care and Reparation for Victims, an institution created in 2012 during the mandate of Juan Manuel Santos.
“Victims of violence in Colombia cannot be compensated, or another path must be built“said Petro, and then he made the proposal that has been criticized by some economic and political sectors.
“The Unorthodox Way”
Referring to the only viable alternative, in his point of view, he expressed: “The issuance routinely made by the Banco de la Republica, instead of going to the banks, should go in bonds for the compensation of the victims in Colombia.”
The leader of the Historical Pact proposed that the issuance power of the State pass, in the first place, to the victims, instead of going to the banks. “Finally, money circulates, but politically it is not the same, socially it is not the same.”
Petro described this path as “unorthodox” and asserted that with this proposal the comprehensive reparation of the victims would take between ten and fifteen yearsat most.
“They will excommunicate me if I say that, not the Church, the Bank, which is worse than the Church,” he said in a humorous tone when making his statement.
Why this proposal?
In his speech, Petro acknowledged that the State “is not capable of compensating” the victims. To support his statement, he said that, according to data from the Victims Unit, the resources necessary for the comprehensive reparation of 10 million people are 300 billion pesos (almost 67,000 million dollars). For this year, 2.5 trillion pesos (558 million dollars) were allocated, therefore, according to their calculations, it would take 125 years to honor all payments.
“Here we are talking about a lie and it is one of the first gears of this peace issue. The country is being lied to (…) so if we want to compensate ten million (people), it costs 300 billion, and if the annual budget is 2.5 trillion, what we are saying to Colombian society is that the victims are going to die first to receive compensation“.
He recognized that “undoubtedly” the repairs cannot be made with the budget allocated for it and neither with the property of the perpetrators, because they have already been delivered, “and in part they have been stolen.”
The decision of the Bank of the Republic
The Colombian president said that, although “many companies” have resorted to the path he proposes, his proposal will not be an imposition.
“We all know that the Banco de la Republica is independent from the government,” he recalled, adding that the decision “should be the result of a national agreement.”
According to the Magna Carta, financing operations in favor of the State must be unanimously approved by the board of directors, “unless in the case of open market operations”.
The board of directors of the issuing entity is made up of the Minister of Finance, the general manager and five members of exclusive dedication, says its website.
However, although there is still no official statement on his part, several voices have expressed their disagreement on the networks.
The former Minister of Agriculture of Santos, Juan Camilo Restrepo, believes that the Bank of the Republic will not accept the presidential proposal and believes that “the message abroad is fatal.”
I don’t think Banco de la Republica will accept this invitation from Petro, but the message abroad – that the president would like to meet government expenses with issue credit – is fatal.
— Juan Camilo Restrepo (@RestrepoJCamilo) April 11, 2023
For his part, Jose Manuel Restrepo, former Minister of Finance in the presidency of Ivan Duque, crossed out the idea of ”almost unfeasible” and said that “it makes monetary policy subordinate to fiscal policy, generates a loss of international financial credibility and makes debt more expensive or unfeasible.”
In the networks has circulated a video released in May 2021where the current general manager of the Bank of the Republic, Leonardo Villar, affirmed that during the pandemic it was not the “time” for a loan from that institution to the Government.
On that occasion, he expressed that the decision, beyond being a “cheap” financing alternative, “would affect the international credibility towards the Government, towards the bank and towards the economy”.
“No advanced country in the world uses direct credit from the Central Bank as a financing mechanism for the Government,” he said in the institutional video.
Despite what was expressed in the context of the covid-19 crisis, a statement from the Bank is expected after the president’s proposal.