Colombian Finance Minister Abruptly Resigns Amid Growing Backlash Over Tax Reform

Protest Clashes Continue for 6th Day... 17 Dead

Citizens protesting against the government's tax reform plan are holding street demonstrations in Bogot?, the capital of Colombia. [Image source=AP Yonhap News]

[Asia Economy Reporter Kim Suhwan] The Colombian government recently pushed for a tax increase plan, but amid widespread protests by citizens opposing it that resulted in 17 deaths, the Minister of Finance abruptly resigned.

On the 3rd (local time), major foreign media reported that Alberto Carrasquilla, Colombia's Minister of Finance, decided to resign, and that Jos? Manuel Restrepo, the Minister of Commerce, would be appointed as his successor.

Earlier, the Colombian government submitted a tax reform bill planned by Minister Carrasquilla to the Congress last month. The reform aimed to increase tax revenue by reducing tax exemption items and other measures.

However, as opposition to the reform spread among citizens, thousands took to the streets to protest. The protests, which began on the 28th of last month, have continued for six days, and violent incidents have occurred at some protest sites, leading to the deployment of military units.

According to government officials, 17 people have died and 846 have been injured so far.

Amid the growing backlash, voices calling for policy revision emerged not only from the opposition but also within the ruling party. Consequently, the government announced it would reconsider the tax reform plan. President Iv?n Duque stated on the 2nd that a new tax law would be introduced to replace the existing reform and that the proposed increase in value-added tax, which sparked public outrage, would be withdrawn.

Alberto Carrasquilla, Colombian Minister of Finance
[Photo by Reuters]

With the withdrawal of Colombia's tax reform amid debt risk concerns, analyses suggest this will negatively impact the long-term outlook of the Colombian market. Recently, international credit rating agencies such as Fitch and Standard & Poor's (S&P) assigned Colombia a BBB- rating, which is just above the junk rating indicating non-investment grade.

In fact, if the credit rating is downgraded, it is expected to deal a significant blow to Colombia, which has not experienced a sovereign default since the 1930s.

Citibank stated, "The government's withdrawal of the tax reform bill has dampened the will for tax reform," and predicted, "This will have a negative impact on the country's credit rating."

This content was produced with the assistance of AI translation services.