What’s happening?
Colombians have been hit hard by the pandemic with the country’s economy shrinking by 6.8% last year.
The vaccine rollout has been slow. More than 74,000 Colombians have died from the illness since the start of the pandemic. Unemployment has spiked, and many Colombians are struggling to find work. To note the Time’s report, “The pandemic has pushed state finances into dangerous territory. The country’s fiscal deficit more than tripled from 2019 to 2020, stoking fears that as it becomes more expensive for Colombia to borrow, the country could enter a debt spiral that compromises government and corporate credit ratings, weighs even more heavily on economic growth, and deprives the state of the money it needs to spend on better health care, education, infrastructure, and plans to reduce poverty.”
Why is it happening?
The proposed tax increase would have affected anyone making more than $656 a month, eliminating exemptions and increasing the number of goods subject to a value added tax. This tax drove outrage across Colombia. Thousands of people came out to protest including students, teachers, health workers, farmers, and indigenous communities among many others, to express their distaste at the tax bill. Although most of the protests were peaceful, police used tear gas and clashed with protesters. There is no exact count yet for how many people died in the protests between police and demonstrators, but the Colombian government is investigating 14 deaths nationally, while human rights groups said police abuses had resulted in more than 20 deaths. A police officer was also reported killed in Soacha on the outskirts of the capital, Bogotá.
Results from the protests:
Following days of deadly protests across Colombia against a planned nationwide tax increase, President Iván Duque has withdrawn the proposal even though he insisted it was needed to fix the country’s economy, struggling badly because of COVID-19. “I am asking Congress to withdraw the law proposed by the finance ministry and urgently process a new law that is the fruit of consensus, in order to avoid financial uncertainty,” he said in a video.
Unfortunately, as the proposed tax law was withdrawn, the protesters demands have transformed and are now encompassing reduction of government corruption and strengthening social nets within Colombia. Duque’s government now faces calls for universal basic income, free university tuition, and the dismantling of the riot police force. Protesters in some Colombian cities, mainly in Cali, have blockaded roads and streets, creating short supplies of food and fuel. Duque has met with members of the National Strike Committee, which has organized some of the protests, but the Colombian government can’t afford to meet most of their demands, and it isn’t clear that the Strike Committee speaks for a big enough portion of the crowd to make the kind of deal that would bring an end to the unrest. As of today, there are still ongoing discussions between the protesters and the Colombian government to assist the Colombian citizens.
IMA Global Risk and Benefits teams has the resources necessary to aid clients with business in Colombia. If there are questions or concerns, please reach out to your service team to explore risk management and policy creation.
https://www.nytimes.com/2021/05/18/world/americas/colombia-protests-what-to-know.html