Colombia Peace Accord: The Costs

Colombian president Juan Manuel Santos, Cuban President Raul Castro and FARC leader Rodrigo Londono alias "Timochenko" in Havana, September 23 last year. (Photo: Colombian Government)

EXPERT PANEL Cynthia Arnson, Wilson Institute; Alberto Bernal, XP Securities; Hunter Carter, Arent Fox; Frank Holder, BRG and Margarita Sanchez, Disan. (Latinvex collage)

Colombia’s costs of a peace accord with FARC.


Colombian think tank Fedesarrollo estimates that the costs of the agreement will amount to, at least, 1 percent of GDP per-year for the next ten years.

“This will prove to be a very large fiscal cost, more so now that Colombia has lost some 3 percent of GDP in oil-related income, one that the country is unlikely to ever recover unless oil prices skyrocket back to $100, something that pundits consider unlikely,” says Colombian economist Alberto Bernal, Chief Global and EM Strategist, XP Securities.

To finance the cost, Colombia’s government will need much more than international aid, experts say. 

“To avoid antagonizing the business community, the government might opt to simply raise the VAT,” says Cynthia Arnson, Director, Latin American Program, Woodrow Wilson International Center for Scholars.  “This is ...

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Keywords: Agriculture, GDP, Taxes

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