BTN News: In an effort to reactivate Colombia’s economy, the National Government is preparing to introduce a controversial bill that would enforce mandatory investments by banks. This proposal, however, has sparked significant backlash from the business sector and financial institutions, who argue that utilizing Colombians’ savings for government-determined investments is highly problematic.
Former President Iván Duque has also criticized the proposal, warning that what the government is calling “forced investments” is essentially the first step toward expropriating people’s savings. Duque urged both Congress and the judiciary to resist what he views as a dangerous threat to citizens’ rights, emphasizing that protecting savings is a moral obligation.
The concerns are not limited to the potential risks to personal savings. President Gustavo Petro, in defense of the proposal, argues that a portion of public savings held in banks should be redirected to low-cost loans for productive activities, such as agriculture. Petro points out that similar measures have been in place for decades within Colombia’s agricultural sector, although he admits that they have not been as effective as intended due to what he describes as the banking sector’s flawed practices, particularly the “substitution” approach, which he believes has stymied the democratization of agricultural credit.
Petro also warns that the current global economic situation could lead to a banking crisis if it worsens. He believes that leveraging the savings “sitting idle” in banks could be a way to preemptively address a potential crisis by channeling these funds into state-controlled entities like Bancóldex, Finagro, the Agricultural Bank, or the National Savings Fund (FNA). These institutions would then use the funds to offer loans for housing, industrial production, agriculture, and tourism, sectors that are seen as vital for revitalizing the economy.
The president insists that these funds would not be lost, as the government would return the money with a “modest” interest rate. However, this reassurance has done little to allay the fears of the business community. Bruce Mac Master, president of the National Business Association of Colombia (Andi), contends that mandatory investments could direct Colombians’ savings into high-risk activities that are not currently in demand for credit, thereby jeopardizing those savings.
Mac Master argues that if the government wants to stimulate certain sectors, it should do so with public resources or through regulatory measures that genuinely incentivize economic activity. He is confident that both Colombian families and businesses would be opposed to having their savings allocated to ventures that carry significant credit risk and uncertain returns.
Similarly, former Finance Minister José Manuel Restrepo has criticized the proposal, labeling it a “very bad idea.” He warns that it could discourage the efficient allocation of resources and increase borrowing costs for both the sectors targeted by the initiative and others. Restrepo also raises concerns about government mismanagement, suggesting that if the state administers these investments, it could lead to increased inefficiencies and the politicization of resource distribution. He also points out that the impact of such a measure would take six to nine months to materialize, while urgent economic interventions are needed now.
Laura Sarabia, director of the Department for Social Prosperity (Dapre), acknowledges the resistance from various stakeholders but emphasizes the need to explore more proposals to refine the initiative. She notes that the government is considering several options to ensure that new investments are directed to sectors crucial for economic recovery. According to Sarabia, the law being debated should aim to make the mechanism sustainable for the financial sector, possibly by adjusting interest rates or offering guarantees.
The debate over forced investments highlights a critical tension between the need for economic recovery and the risks associated with government intervention in financial markets. As the proposal moves through the legislative process, it will be crucial to consider the potential long-term impacts on both the economy and the financial security of Colombians.
