Colombian Judges Likely to Kill Leftist Leader’s Pension Reform

(Bloomberg) -- President Gustavo Petro’s flagship plan to boost state control over Colombian pensions is likely to be killed by the nation’s top court, according to constitutional experts who spoke with Bloomberg.

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Petro last week lauded the reform as the biggest achievement for Colombian workers in years, but legal challenges mean it may never take effect.

Under Colombia’s constitution, laws have to be approved within two congressional periods, which run from July 20 to June 20 the following year. Following several lengthy delays during the two-year process, the ruling coalition last week rushed the bill through the lower house without a debate, to beat the impending deadline.

Some lawmakers argued that this violated the constitution, setting up another clash between the government and the nation’s Constitutional Court.

“The hurry, the desperation, and the lack of rigor from the government mean that the reform is now going to fall in the court,” said Katherine Miranda, a lower house representative for the Green Party, speaking by phone.

The court would typically take about seven or eight months to rule on such a case, Miranda said. Although the law is meant to take effect in July 2025, the court could also issue a stay order to prevent the law from taking effect until it has issued its decision.

The pension law creates a program to expand subsidies for elderly Colombians living in poverty, and eliminates competition between the public and private pension systems. It also creates a savings fund to pay for future pension compensation, to be managed by the central bank, which could potentially boost demand for local peso bonds, or TES.

It would also allow private funds to charge a new fee on assets under management.

On Friday, Petro’s allies in the Lower House voted to simply endorse in its entirety the text the senate had approved in April, leaving opposition lawmakers without the chance to debate the bill. That breached the rules, according to Ramiro Bejarano, a constitutional lawyer.

“It’s clear that the government chose to pressure lawmakers, so that there was no debate in the plenary of the chamber and they skipped an important part of the legislative process,” Bejarano said. “I see a strong likelihood that the reform will fail in the court.”

Debating and studying the texts is among the functions and responsibilities of both chambers, so the lower house committed a procedural irregularity in this case, said Kenneth Burbano, head of the Constitutional Observatory at Universidad Libre in Bogota.

Gigantic Pressure

Carlos Edward Osorio, a lower house representative from the opposition Democratic Center party, said he’ll challenge the reform in the constitutional court, arguing that lawmakers didn’t have sufficient opportunity to debate the bill. Osorio last year successfully challenged the government’s attempt to make oil and mining companies pay more by changing the rules on royalties.

The court previously struck down emergency decrees whereby Petro sought to bypass congress to address hunger and and lack of drinkable water access in La Guajira, one of Colombia’s poorest provinces. Another court blocked Petro from taking control of a regulatory commission that sets electricity fees.

The labor and finance ministries didn’t reply to written requests for comment.

The government has repeatedly clashed with magistrates and prosecutors, including with the Attorney General’s office over an investigation into Petro’s son Nicolas. Petro has alleged that there is a “soft coup” by a conservative establishment to undermine his government.

He has also repeatedly criticized the central bank for refusing to cut interest rates as fast as he would like.

Constitutional Court magistrates are likely to come under “gigantic” pressure from Petro supporters, Bejarano said.

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