WHAT’S (NOT) GOING ON IN COLOMBIA?

Colombian Finance Minister Alberto Carrasquilla has admitted the obvious: Congress will not approve his “budget flexibilization” legislation. Instead of coming to grips with Colombia’s disastrous public finances, the politicos – with encouragement from President Alvaro Uribe – have focused on approving his reelection laws and a plan to disarm Colombia’s insurgents. Yet the government had promised the IMF that Congress would approve a plan to reform its inoperable budget process by the end of June. But the politicians have already weakened the mind-numbingly dull law. And while the minutiae of budget procedures are certainly tedious, it is hard to exaggerate the importance of Carrasquilla’s package. With luck, Congress will revisit a strengthened law later this year. Colombia was once an investment grade country until a financial crisis and a batty new constitution in the late 1990s turned it into one of Latin America’s less impressive credits. Politicians adopted Argentine notions of fiscal responsibility. Colombia now faces years of hard work to get its finances under control. Sound finances are a necessary condition for stable growth, so making the politicians focus on balancing the books would do Colombia a lot more good than reelecting Uribe.