An eventual deal with guerrillas of the Revolutionary Armed Forces of Colombia, or FARC, could open the country_s ...
An eventual deal with guerrillas of the Revolutionary Armed Forces of Colombia, or FARC, could open the country_s eastern plains to Brazilian-style agribusiness, and divert tax revenue from security and defense spending to more productive uses, Cardenas said in an interview in his Bogota office.
_My bet is that if anything is going to grow faster in Colombia with the end of the conflict, it_s going to be agricultural production,_ the 50-year-old Cardenas said in an interview 17 days after being sworn in as finance chief. _We_re talking about palm oil, soybeans, rubber, sugarcane, things like that._
The FARC surprised many Colombians Sept. 4 by agreeing to sit down with President Juan Manuel Santos_ government next month, in Oslo, for the first talks in a decade aimed at ending Latin America_s longest-running armed conflict. A U.S.-funded crackdown has already improved security for oil and mining companies across much of the Andean nation, helping lure record foreign investment that_s allowed Colombia to overtake Argentina as South America_s second-biggest economy.
While a peace dividend would spur growth and investment even further, the economy can still grow at an _outstanding_ long-term pace of 4.5 percent to 5 percent even if the talks fail, Cardenas said.
_I don_t want to give the impression that our success and the good momentum of the Colombian economy hinges on good results in that process,_ said Cardenas, who served as Santos_ mining minister before switching jobs as part of a Cabinet shake-up. _It would be a nice thing to have, it will add to economic growth, but we already have outstanding economic growth._
Cardenas_ comments came the same day the national statistics agency reported that economic growth accelerated in the second quarter.
The FARC have been waging war on the Colombian state for nearly five decades, leaving large parts of the Andean nation off-limits for investors.
Agriculture has been held back more than energy and mining by the guerrillas, since oil facilities are more localized and easier to protect than farms, Cardenas said.
The talks come as the FARC step up attacks on oil workers, pipelines and energy towers this year to try to derail what Santos says is one of the country_s growth _locomotives._
Attacks on oil pipelines more than quadrupled to 88 in the first seven months of the year, from 20 in the same period in 2011, according to government statistics, even after the Santos government tracked down and killed the FARC_s top two commanders.
University of California, Berkeley-educated Cardenas was appointed to his post on Aug. 23 and took over the finance ministry this month from Juan Carlos Echeverry. Cardenas was best man at Echeverry_s wedding, and says he shares many of his friend_s views on economics.
Before being appointed as minister of mines and energy last year, Cardenas had served as director of the Latin America Initiative at The Brookings Institution beginning in 2008.
The economy Echeverry left him grew 4.9 percent in the second quarter from a year earlier, the national statistics agency said yesterday, faster than Brazil and Mexico, while lagging behind Chile and Peru.
Over the last decade, Colombia_s economy had an annual average growth rate of 4.5 percent.
Even though annual growth in the second quarter exceeded the forecasts of all 29 analysts surveyed Bloomberg, Cardenas says there are _good reasons_ for the central bank to continue to cut interest rates to offset the global slowdown.
More interest rate cuts would also help curb the peso_s appreciation as the U.S. Federal Reserve_s third round of quantitative easing weakens the dollar, Cardenas said.
At the same time, retail sales and industrial production reports for July, published by the statistics agency on Sept. 19, both came in below the median estimates of economists surveyed by Bloomberg.
Sales rose 1.3 percent, below the 3.6 percent forecast, while output grew 1.5 percent, lower than the estimate of all but two of 20 economists_ forecasts.
The central bank cut interest rates by a quarter point at each of its last two policy meetings, citing the weak global economy, which has cut demand for the country_s commodities exports. In Colombia the finance minister sits on the central bank_s seven-member policy committee.
The central bank will hold its benchmark interest rate at 4.75 percent at its September policy meeting next week, according to the median forecast in a Bloomberg survey of 14 analysts.
The Colombian peso has strengthened 8.1 percent this year, the biggest gain of the 31 most traded tracked by Bloomberg, behind the Mexican peso, Chilean peso and the Hungarian forint.
Cardenas said the Treasury will continue to intervene in foreign exchange markets to reinforce the central bank_s daily dollar purchase program and weaken the peso.
The Petroleum Stability Fund will also buy an additional $500 million by the end of the year, taking its total holdings to close to $1 billion in savings abroad, to reinforce the central bank_s dollar purchase program.
The government wants to weaken the peso to help the country_s manufacturing sector, which is one of the government_s main worries, Cardenas said.
The government won_t present a bill to Congress this year to allow it to sell a stake in Ecopetrol SA (ECOPETL), Colombia_s largest oil company, Cardenas said.
_We will not be pushing that bill this year, we have other priorities,_ he said. _It_s not that we_re ruling that out permanently, but it_s not a pressing issue for us._
By Matthew Bristow and Christine Jenkins