Battered by the collapse in global oil prices, the news just
keeps getting worse for Colombia. The Colombian peso fell
past 3,300 COP to 1 USD again, close to an all-time low, as oil prices dropped
near $30 per barrel. Oil is Colombia’s biggest export, so its currency has
risen and fallen along with global oil prices. As a result, Colombia has had to
scramble to address its current account deficit, estimated at 6.2% in 2015, the
country’s largest in at least the past 35 years.
Colombian Finance Minister Mauricio Cardenas told Reuters
that, to further address this problem, Colombia in 2016 hopes to implement a
large tax reform to cut down on tax evasion and to issue $1.5 billion in global
bonds. Minister Cardenas explained that the reform is “about making sure our
tax system deals in a more effective way with tax evasion, widens the tax base
... so that it's not just a few corporations and individuals that take most of
the tax burden.”
In order to widen the Colombian government’s tax base well
beyond oil revenues, the planned reform will hit on both the value-added tax
and corporate and personal income taxes.
Plunging oil prices have hurt not just the Colombian
government, but also Colombian state-owned oil company Ecopetrol. Colombian
business journal Portafolio
reported that the value of Ecopetrol on the Colombian stock exchange had
plummeted, dragged down by the collapse in global oil prices. Today, Ecopetrol
is trading at close to 1000 COP per share, 46% below its value a year ago, and
a steep fall from its 2012 peak.
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