Gustavo Petro: Colombia's New President Takes Office

• Published date: 11 August 2022
• Subject Matter: Employment and HR, Retirement, Superannuation & Pensions, Employee Benefits & Compensation
• Law Firm: Herbert Smith Freehills
• Author: Edward Dougherty, Florencia Villaggi and Daniela Paez

On August 7, 2022, Gustavo Petro took office as President of the Republic of Colombia. This election is historic for multiple reasons: Petro won with the highest number of votes in Colombian electoral history (over eleven million votes); and this is the first time a left-wing candidate has been elected as President in the country. This certainly entails a new chapter for Colombia - and depending on how his governmental plan is put into practice, Petro's presidency will have an impact on foreign investment.

We discuss below some of the key proposals in Petro's governmental plan "Colombia Humana" (Humane Colombia) (the "Plan"), which cuts across various sectors including oil & gas, mining, renewable energy, and foreign trade.

Petro's Key Proposals

Energy transition

One of the main proposals Petro has focused on has been the defense and promotion of the environment as well as the fight against climate change. Accordingly, Petro proposes to move away from an economic model based on extraction of fossil fuels and give room to the development of clean energy. To attain this goal, the Plan contemplates (i) putting an end to the granting of new hydrocarbon exploration licenses, (ii) discontinuing fracking pilot plans and offshore drilling, and (iii) banning open-pit mining. According to Petro, this would allow an accelerated transition to clean energy sources such as wind and solar.

Considering that the hydrocarbon sector contributes to approximately 3.3% of Colombia's GDP, it remains to be seen how these proposals would affect current projects. Petro's position has been criticized in light of the current trend of increasing oil prices. In fact, the Organization for Economic Cooperation and Development (OECD) projects that Colombia will be the Latin American country with the highest growth in the region this year, mainly because of that trend.

Fiscal reform

The Plan proposes the implementation of a series of social programs, including free public education and universal health care. To develop the promised social programs, Petro has proposed to raise taxpayers' contributions up to COP 50 trillion (approximately USD 20 billion) through a tax reform. President Petro has stated that the tax reform will focus on increasing the tax burden on Colombia's upper class and the country's largest companies.

Agrarian reform

In April 2022 (before the presidential elections), Petro signed an affidavit before a notary public stating that he would not expropriate private property...