Ex-Diplomat to Lead ProColombia as Investors Remain Cautious Of Petro

Former diplomat Carmen Cecilia Caballero Villa was named President of ProColombia, Colombia’s federal investment promotion agency (IPA) and a key player in the country’s FDI strategy.

Caballero, who previously worked as Consul General in Spain, takes over as the country works hard to revive its tourism industry and months into Gustavo Petro’s presidency, which has kept global investors cautious. 

As a diplomat, Caballero played a key role in wrapping up an agreement with Spain to avoid double taxation for Colombian firms operating in the European country. Moreover, she has experience in running private businesses, particularly in the tourism industry.

Carmen Cecilia Caballero Villa es la nueva presidenta de @PROCOLOMBIACO. La experta en asuntos internacionales continuará promoviendo el posicionamiento de @Colombia 🇨🇴 como potencia mundial de la vida.

Conozca más sobre la presidenta aquí 👇https://t.co/q8Vtd6bo8G

— PROCOLOMBIA (@PROCOLOMBIACO) October 24, 2022

ProColombia described its new President as a woman who knows how to identify market opportunities and who’ll help domestic companies expand operations overseas.

In July this year, the agency claimed that it helped the country bring more than US$73 billion in foreign investment over the past four years. The tourism sector alone earned around US$16 billion during that period.

A Challenging Task for ProColombia

Caballero will face a challenging environment leading ProColombia. She’ll be serving under an administration that has yet to convince global investors of its compromise with economic development without falling into radical formulas. 

Gustavo Petro took the reins of Colombia in the midst of a swirl of uncertainty. He’s a leftist with a radical rhetoric, a first for a country that has been ruled by the right and right-of-center throughout its modern history. Even before he was elected, analysts and investors alike feared his plans for the oiling and mining industries, Colombia’s pacification process, diplomatic relationships with Venezuela and spending on welfare programs.

Months into Petro’s presidency, global investors seem to be betting on well-informed caution instead of panic even when analysts keep warning about heightened risk in Colombia. 

The current situation can be described as a cautious standstill from both parts. Colombia’s President has yet to abandon the most ambitious aspects of his agenda, though his government hasn’t gone all out on it. Investors have yet to quit the country as an attractive destination for their capital, but they’ve shown willingness to move someplace else if pushed too far.

Avanzar hacia un modelo de desarrollo sostenible y crear un sistema justo de tributación, donde los que más tienen sean los que más tributen, son los objetivos de la reforma que presentamos. Agradezco a las Comisiones Económicas por su aprobación en primer debate.

— Gustavo Petro (@petrogustavo) October 6, 2022

A Mixed Landscape

The data is mixed on Colombia’s current economic performance and what can be expected of it in the near future. The Colombian peso lost 7% of its value against the US dollar throughout October and fell to a record low in early November, apparently in response to the global markets’ concern over Petro’s economic policies, particularly for the energy and mining sectors. 

Colombia’s stock market –tracked through the COLCAP index– has been losing steam since Petro took the presidency in early August, suffering a steep fall in late September. It has been showing signs of rebound since then, but it has yet to recover completely and remains far from the heights reached in April of this year.

Projections for Colombia’s economic performance this year are good, putting it among the best performers in the region for 2022. The World Bank projects 7.1% growth for this year, and the OECD sees a jump of 6.1%. Both organizations see a sharp slowdown for the country in 2023, though the same is expected for the whole region. 

Fitch Ratings warned recently about the President’s spurs of radical rhetoric on Twitter, though the agency sees little possibility for change in the country’s rating –which was downgraded last year– in the short term. That is, it won’t improve, but it won’t move downwards either.

 Although Gustavo Petro is the leading figure in Colombia’s government, his is not a one-man operation. Finance Minister José Antonio Ocampo and other, more moderate voices within his cabinet have been able to keep investor panic at bay. The country’s central bank, for example, has been pushing interest rates upwards in spite of the President’s open criticism of the strategy.

The approach of global investors to Colombia has been replicated throughout Latin America despite the rise of left-leaning governments in the region, a phenomenon known as the “pink tide”.

Brazil, Chile, Argentina and Mexico elected their own left-leaning presidents over the last four years, this in a context of worsening economic conditions and widening inequality in the whole region. 

In spite of the tide, investors seem to refuse to quit on their ambitions for Latin America. Foreign investment keeps flowing into the region, where some of its biggest economies remain attractive destinations for capital and are still coveted for their potential, particularly as technological hubs.