(Bloomberg) — Colombian President Gustavo Petro is on the verge of appointing Germán Ávila, the current head of the state banking group, as his next finance minister, according to a source familiar with the matter.
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Ávila will step in as Petro’s fourth finance minister following the resignation of Diego Guevara just three months into his position, as per the unnamed source who is not authorized to speak publicly on the issue.
Guevara faced challenges in convincing Petro to rein in government expenditures ahead of the elections next year, and his recent departure has led to a significant drop in the country’s bonds and currency.
According to the source, Ávila has already begun visiting the finance ministry and engaging in meetings there, with his CV set to be published on the presidency’s website soon — an official step prior to him assuming the role. Guevara will not attend the monetary policy committee meeting on March 31, the source noted.
Read: COLOMBIA INSIGHT: Guevara’s Departure Highlights Delicate Fiscal Situation
Ávila, a former comrade of Petro from their days in the M-19 guerrilla organization, currently leads Grupo Bicentenario, which comprises government-owned banks, fund management firms, and insurance companies. Both individuals left the armed struggle over thirty years ago to embrace civilian life.
Ávila will assume office tasked with managing the largest fiscal deficit since the Covid-19 pandemic, a gap exacerbated by a surge in public spending alongside dwindling tax revenues.
Colombia recorded a budget deficit of 6.8% of its gross domestic product last year. The administration will now need to reduce the 2025 budget by 12 trillion pesos ($2.9 billion) after Congress blocked an attempt to increase taxes.
Read: Colombian Peso Plummets on Unverified Reports of Guevara’s Resignation
Earlier this month, Fitch Ratings downgraded Colombia’s credit outlook from stable to negative while maintaining a BB+ sovereign rating. The nation lost its investment-grade status in 2021.
Ávila pursued his studies in economics at Bogotá’s National University, recognized as one of the country’s leading institutions of higher education.
–With contributions from Nicolle Yapur.
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