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Colombia’s finance minister José Antonio Ocampo was ousted by leftist president Gustavo Petro on Wednesday amid a reshuffle of ministers and the breakdown of his governing coalition in congress.
Ocampo, a moderate, was widely viewed by investors as a brake on the president’s most high-handed impulses.
“Today we build a new cabinet that will help consolidate the government programme,” Petro said in a statement on Twitter.
Ocampo is one of seven ministers to leave Petro’s cabinet, alongside the ministers of agriculture, interior, health, science, telecoms and transport. The head of the president’s administrative office was also replaced.
Ocampo will be replaced by economist Ricardo Bonilla, another economic moderate who served under Petro when he was mayor of Bogotá.
“The market reaction to Bonilla’s appointment should be initially negative,” said Munir Jalil, chief economist for the Andean region at BTG Pactual. “But the track record of Bonilla regarding fiscal matters makes us believe he will not change the fiscal convergence plan conceived by Ocampo.”
The reshuffle comes a day after Petro announced the end of his coalition in congress. Leaders of member parties had vowed to oppose his controversial health reform plan, which seeks to expand the role of the state in providing healthcare.
Petro, a former guerrilla member who took office in August promising widespread economic reforms, had also requested the resignation of the entire cabinet on Tuesday in frustration at his stuttering agenda.
“Between the two sides of Petro — the consensus builder that looks for nationwide agreements and the radical with fixed ideas — it is the second that will always win out,” Alejandro Gaviria, a respected former health minister who resigned as education minister in February, told the Financial Times on Wednesday.
The Colombian peso fell 4.6 per cent on Wednesday as the political crisis deepened. A dollar bond maturing in 2037 dropped in price to 93.8 cents from 95.5 cents, but recovered more than half of its losses.
In a dual legislative blow on Tuesday, a component of Petro’s development plan was also removed that would have allowed the government to buy land for farmers in order to implement a peace deal reached in 2016 by a previous administration with leftist rebels.
In a speech earlier on Tuesday, Petro had raised the idea of installing “a government of emergency, given that congress wasn’t capable of approving some simple articles”. He added that such an administration would not be a government by decree and officials would “work hard, day and night”.
Shortly before his announcement that the coalition had ended, Petro requested the resignations of all 18 of his cabinet ministers, according to Ocampo and mines and energy minister Irene Vélez Torres.
A former member of the M-19 leftist guerrilla group, Petro was elected on promises to make widespread reforms to the longstanding conservative economic orthodoxy. He was supported by a coalition in congress made up of traditional centrist parties and others from the left alongside his own Historic Pact party.
Since then, he has enacted progressive tax legislation but other reforms have proven more challenging, particularly the health plan. If approved, the bill would strip public health insurers of their role as intermediaries — an overhaul that led Gaviria to resign in February. Congress cancelled a scheduled debate on the health bill.
The current crisis is “unprecedented”, Roy Barreras, the president of the senate and a tentative ally of Petro, told reporters. “People don’t want polarisation.”
Opposition leaders including former president Álvaro Uribe attacked Petro and his reform plans. “State control leads to the mistreatment of the population and the privilege of the political bureaucracy,” Uribe wrote in a post on social media.
Petro’s plans to expand the government’s role in pensions provision and improve workers’ rights have also drawn opposition from the business community.
The loss of a congressional majority will further imperil Petro’s ability to govern. In February, as his health reform began to stutter, he called on his supporters to “rise up” against elites and rally in Bogotá, the capital.
Sergio Guzmán, director of Colombia Risk Analysis, said Petro’s sweeping announcements on Tuesday drew from radical tendencies that would impede his administration.
“Petro is making sure that instead of being the first of many leftwing presidents in Colombia, he will be the only one,” Guzmán said.
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