Colombia is slowly adjusting to the oil crisis

For the last year and a half, despite driving Colombian economic growth for more than a decade, Colombia’s economy has been dragged down by its oil industry. The dual problems of dwindling domestic reserves and a collapse in global oil prices have resulted in a full-blown crisis for the Colombian oil industry.

On Monday, El País spoke about the oil crisis with Rubén Darío Lizarralde, president of Campetrol, the Colombian trade association for oil service providers. Lizarralde reported that the financial difficulties in the Colombian oil industry have already resulted in 40,000 lost jobs. Worse, because the oil industry’s activities are so concentrated in specific towns and regions, these oil regions have been completely devastated by the loss in revenue caused by Colombia’s oil crisis.

Lizarralde though pointed to Colombia’s dwindling reserves, not low oil prices, as the biggest problem for the oil industry. He called on Colombian state oil company Ecopetrol to invest heavily in exploration in spite of low oil prices in order to guarantee the future of the Colombian oil industry. He believes that oil prices will soon rebound, and that Colombia must ensure that its oil industry remains strong.

At a national level, the sudden decline in oil revenues has left the Colombian government scrambling to address its revenue shortfall. Late last week, Colombian finance minister Mauricio Cárdenas announced that the government would seek to implement a massive tax reform in order to resolve its revenue woes. Over the weekend, Colombian President Juan Manuel Santos assured the country that “absolutely nothing” has been decided yet in regards to the tax reform.

He added that, “The Government has said that it would study the possibility to present before Congress a structural reform, and we have asked many people that they share us their knowledge and proposals. … We will evaluate and study all of this, and we will see what type of reform we can put into action.”