Colombia’s finance minister ousted by leftist president

Colombia’s leftist president Gustavo Petro has ousted moderate finance minister José Antonio Ocampo after his governing coalition broke down amid disputes over radical plans for reform.

Ocampo, widely viewed by investors as a brake on the president’s most radical impulses, will be replaced by Ricardo Bonilla, who served under Petro when he was mayor of Bogotá.

“Today we build a new cabinet that will help consolidate the government programme,” Petro said in a statement on Twitter on Wednesday.

Bonilla wrote on Twitter that he would “maintain economic stability”. A note from Citibank to clients described Bonilla as “more ideological” than Ocampo and said reforms would now be harder to pass with a “left-leaning shift” in the cabinet.

“The market reaction to Bonilla’s appointment should be initially negative,” said Munir Jalil, chief economist for the Andean region at BTG Pactual. Jalil said Bonilla’s record on fiscal policy suggested he would not change plans to narrow the country’s fiscal deficit.

Ocampo is one of seven ministers asked to leave Petro’s cabinet, alongside the ministers of agriculture, interior, health, science, telecoms and transport. The head of the president’s administrative office has also been replaced.

Petro, who took office in August promising widespread economic reforms, had reshuffled the cabinet in frustration at the difficulty of pushing through changes. The governing coalition had collapsed after leaders of member parties vowed to oppose Petro’s health reform plan.

“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 former health minister who resigned as education minister in February, told the Financial Times on Wednesday.

The Colombian peso fell 4.6 per cent against the dollar on Wednesday as the political crisis deepened.

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”.

A former member of the M-19 leftist guerrilla group, Petro was supported by a legislative coalition of traditional centrist parties and others from the left alongside his Historic Pact party.

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. Congress cancelled a scheduled debate on the health bill.

The crisis was “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.