Political Crisis Looms in Colombia as Peace Deal Collapses
- Nation’s sovereign debt may be downgraded without tax reform
- Government coalition under strain in aftermath of ‘no’ vote
The vote that was supposed to bring an end to Colombia’s conflict instead only served to show how divided the nation has become on the issue, and may signal the start of a drawn-out political crisis.
The 50-50 split that torpedoed President Juan Manuel Santos’s proposed peace accord on Sunday will embolden his opponents to challenge him at every turn, analysts said after the vote. The result could be a lame-duck government that limps through to the end of its term in 2018, unable to pass needed legislation. For investors worried about how the country will scrape together the funds to close its fiscal deficit and avoid a credit-rating downgrade, that’s a big worry. They dumped the peso as soon as trading opened on Monday, and its 3.2 percent drop since the vote is the biggest among more than 140 currencies tracked by Bloomberg.