general news 217
Colombia’s Ministry of Transport announced August 12 that Medellin’s José María Córdova (JMC) international airport in suburban Rionegro will host six “pilot test” passenger routes -- once airlines obtain takeoff/landing “slots” from the Aerocivil regulatory agency.
“After being approved for the pilot plan by the Interior Ministry, the airlines must request from Aerocivil the itineraries and slots to start the commercialization of the flights,” according to Airplan, the operator of JMC airport.
First out of the gate, Medellin-based EasyFly announced August 13 that at JMC it will begin daily flights to/from Bucaramanga and to/from Pereira starting Tuesday, August 18.
The newly approved “pilot” routes will connect JMC to-and-from Palonegro de Lebrija airport (Bucaramanga), Camilo Daza airport (Cúcuta), Matecaña airport (Pereira), La Nubia airport (Manizales), El Edén airport (Armenia) and Gustavo Rojas Pinilla airport (San Andrés island).
However, before any flights can begin, “all the recommendations of the biosafety protocols of the Ministry of Health must be followed,” added Transport Minister Ángela María Orozco.
As an extra precaution, passengers booking flights between these seven cities are supposed to “take an antigen test or [get a] certificate of the other diagnostic or confirmatory alternatives, a maximum of two days prior to the flight.”
This new test requirement is an “additional measure to what is established in the [Health Ministry passenger flight] protocols,” according to an August 11 Interior Ministry order authorizing the new “pilot” flights to-and-from JMC airport.
According to a July 16, 2020 bulletin from the U.S. Food & Drug Administration (FDA), “antigen tests usually provide results diagnosing an active Coronavirus infection faster than molecular tests [PCR tests, the type most used in Colombia and the U.S.], but antigen tests have a higher chance of missing an active infection. If an antigen test shows a negative result indicating that you do not have an active coronavirus infection,[then] your health care provider may order a molecular test to confirm the result.”
As for antibody (serology) tests, such tests “may provide quick results, but should not be used to diagnose an active infection,” according to FDA. “Antibody tests only detect antibodies the immune system develops in response to the virus, not the virus itself. It can take days to several weeks to develop enough antibodies to be detected in a test.”
By contrast, while PCR molecular tests are by far the most reliable for Covid-19 detection, actual reporting of PCR test results typically take several days or even a full week in Colombia (and in most of the U.S.), because PCR test labs here are currently overwhelmed.
Hence a PCR test doesn’t seem a practical option for meeting the new Interior Ministry rule requiring passengers to get a Covid-19 test result within two days prior to a booked flight.
According to the Health Ministry, the other mandatory biosafety protocols for these new flights include:
1. Passengers must arrive a maximum of two hours in advance of the scheduled time of their flight, and with their electronic check-in ready to avoid delays and congestion.
2. Passengers should only carry personal luggage, bags or small backpacks that can be stored under the passenger seat. The rest of the luggage will go into the plane’s baggage compartment.
3. Passengers should have already downloaded the CoronApp-Colombia application onto their cell phones, with all required information filled out.
4. Only passengers and those who work at the airport can enter the terminal.
5. Temperature control will be carried out for all persons entering an airport and upon the arrival of flights.
6. “All people, without exception, passengers and workers who are in an airport must use personal protection elements (face masks).”
7. All airport users, crews and employees are obliged to respect the physical distance of two meters in areas such as counters, scanners and in the lines to board aircraft.
8. Boarding will be authorized only when the aircraft is ready.
9. Inside the aircraft, on-board service will not be provided, and travelers will be asked not to use inflight entertainment systems such as screens, mobile phones, among others. As far as possible, aircraft toilets should not be used.
10. Passengers and crew will wear masks at all times during the flight.
11. Passengers must remain seated during the flight.
Medellin-based electric power giant EPM announced August 11 that it just filed a COP$5.383 trillion (US$1.44 billion) claim against Mapfre Insurance (Colombia) as part of parallel conciliation procedures that seek to resolve an estimated US$2.6 billion in losses resulting from a 2018 tunnel collapse at the Hidroituango hydroelectric project in Antioquia.
The claim against Mapfre is a “request for prejudicial conciliation” in a Medellin Administrative Court “based on the occurrence of a loss in the ‘Construction All Risk Policy’” that EPM had previously bought to protect itself against potential damages and losses during and after construction of its 2.4-gigawatt, US$5 billion Hidroituango project, according to EPM.
The April 28, 2018 collapse of the "auxiliary deviation gallery" (GAD) diversion tunnel inside the Hidroituango project resulted in both physical and financial damages “that have been estimated, to date, in a sum close to COP$10 trillion [US$2.6 billion],” according to EPM.
“Taking into account the coverage, protections and limits of the [Mapfre] policy, the claims of the conciliation request amount to the sum of COP$5.383 trillion [US$1.44 billion],” according to EPM.
EPM previously had announced a parallel conciliation process involving Hidroituango’s construction and design contractors as well as their insurors --Suramericana and Chubb (see Medellin Herald August 10, 2020).
EPM Board Resigns in Protest
Meanwhile, EPM’s entire board -- except for Medellin Mayor Daniel Quintero -- announced August 10 that they have resigned en-masse in protest over EPM general manager Alvaro Guillermo Rendon and Mayor Quintero’s failure to consult them in transcendental decisions -- including the new Hidroituango conciliation process as well as a prior proposed scheme that would radically alter EPM’s entire business model (see Medellin Herald July 3, 2020).
While EPM and the Mayor legally are required to consult with the Medellin City Council on transcendental matters affecting city-owned EPM, the company’s management also “ought to discuss in detail and seek the counsel of the Board of Directors” before making radical decisions, according to the joint letter of resignation signed by the board members.
“We are worried that [top EPM management] are not observing good practices of corporate governance that have characterized Grupo Empresarial EPM,” the letter continues.
Rather than embarking on far-reaching schemes without prior Board consultation, EPM instead ought to prioritize completion of the Hidroituango project, successfully integrate the recently acquired “Caribe Mar” power utility in northern Colombia, and focus on Covid-19 impacts that potentially threaten the finances of its power customers, according to their letter.
Given the “repeated ignoring of the Board of Directors, we are obliged to present our resignation,” the letter concludes.
EPM Management Response
Reacting to the Board resignation, EPM filed an August 11 statement with Colombia’s Superfinanciera oversight agency giving its response.
In the statement, EPM claims that the earlier joint proposal (since withdrawn) by EPM and Mayor Quintero that would radically alter EPM’s business model “had been presented to the board members” even though “the competence for the reform of the statutes is not the Board of Directors, but the City Council, at the initiative of the Mayor.”
In addition, decisions about the new Hidroituango conciliation scheme “did not belong to the Board of Directors,” according to the EPM filing. What's more, the conciliation decision bypassed the Board because “the terms conferred by the procedural regulations for submitting claims were close to being fulfilled, under penalty of expiration” by a crucial deadline, according to EPM.
Antioquia’s Business Associations Rip EPM Leadership
Meanwhile, the influential “Comite Intergremial de Antioquia” (the Inter-Trade Committee of Antioquia) -- which includes all 29 of Antioquia’s main business trade associations and all five Chambers of Commerce -- issued an August 12 bulletin denouncing EPM’s top management for actions that triggered the EPM Board’s mass resignation.
“We consider [EPM management’s] ignoring of its statutory Board of Directors in matters of enormous and strategic transcendence -- ignoring basic and fundamental aspects of the norms of its own corporate governance -- puts at risk the stability and interests of the institution,” according to the Committee bulletin.
The resulting mass resignation of the Board “generates a loss of credibility in the management of the enterprise, gravely affecting its operation, its relationship with lenders and investors, triggering future problems that will result in dire social and economic consequences that will affect millions of persons,” according to the group.
“The Inter-Trade Committee of Antioquia respectfully requests a clear, coherent and sensible explanation on behalf of the legal representative of [EPM] about this confused, questionable and unfortunate situation.”
Because of the EPM Board’s mass resignation, “we announce a decision to promote immediately the formation of a Civic Committee which, acting in oversight, will jealously guard the interests of EPM -- which are the interests of Medellin and Antioquia -- and [the Committee] will act solely under technical and sensible criteria, opposing and denouncing irregular actions,” the bulletin concludes.
Former Medellin Mayor Federico Gutiérrez (2016-2019) once again is helping to move Medellin into the limelight via an interview published in the latest edition of the International Monetary Fund (IMF) Finance & Development monthly magazine.
The former Mayor – now a national political commentator and seen as a likely pre-candidate for Colombia’s Presidential elections in 2022 – enjoyed a well-recognized reputation here as an unpretentious, transparent, bright and exuberant person who was happiest -- often actually joyous -- when meeting and listening to ordinary citizens, especially when walking around Medellin’s poorest neighborhoods.
Yet Gutiérrez – a soft-spoken, political moderate – simultaneously was just as comfortable dealing with the city’s business-sector movers-and-shakers -- and he showed notable facility in intellectual debates on public policy, economic issues and consensus-making.
Below is the IMF interview published in its entirety:
Former Mayor Federico Gutiérrez Discusses how Prioritizing Security and Sustainability Paved the Way for a 21st Century City
Volume 57, Number 2
International Monetary Fund Finance & Development (F&D) In The Trenches
In 1991, Medellín, Colombia’s second-largest urban area, was the world’s most violent city. Today, the “City of Eternal Spring” is internationally recognized as one of the most innovative, inclusive, and sustainable cities in the world.
Federico Gutiérrez, born in Medellín in 1974 at the advent of Colombia’s violent period of armed conflict, was the city’s mayor from January 2016 until January 2020—helping spearhead many efforts to cement the city’s future as one of peace and prosperity. He credits the determination and unity shown by the people of Medellín for their commitment to overcoming violence and conflict, which has won their city accolades and admiration.
Speaking with Finance & Development’s (F&D) Marjorie Henríquez for our latest issue of F&D, Gutiérrez shares his thoughts on the city’s remarkable transformation over the past three decades.
F&D: What was the turning point for Medellín?
Gutierrez: In the 1980s and 1990s our society hit rock bottom with the tragedy of narcoterrorism. In 1991 we recorded a homicide rate of 381 murders per 100,000 inhabitants. Today the rate is approximately 20 per 100,000 inhabitants -- a 95% decrease. Although the only acceptable figure is zero, we have achieved significant progress in curbing violence and ensuring respect for life.
As to whether there was a specific turning point, that is complicated and open to debate. Ever since businesspeople decided to stay in Medellín in the 1980s and 1990s -- not giving in to the violence -- we began to develop a vital strategy rooted in teamwork. The business fabric of our city is extremely solid, and this can be explained to a great extent by the difficulties that the private sector had to face in order to survive. In the midst of violence, staying was a great act of bravery.
There were no shortcuts, but there were practical solutions. One of the latter involved partnerships between the public sector, private sector, academia, and civil society. Teamwork as a society was a determining factor in the city’s social transformation. The mafia upended our values: it turned hard and honest work into easy money, sobriety into opulence and, worst of all, it took the value out of life and instead put a price on it. Though we still have a long way to go, we have started recovering such values as life, respect, and freedom.
In fewer than three decades, Medellín has become a benchmark for the world. It is a socially innovative city that is today an affiliate center for the Fourth Industrial Revolution for Latin America, in partnership with the World Economic Forum. Experiencing the worst things possible as a society has made us stronger and more resilient. Medellín is a city that acknowledges its past, takes pride in its present, and above all, views its future optimistically.
F&D: As mayor, what were your key priorities?
Gutierrez: A government’s priorities must, in some way, be the priorities of the people. For us, they were education, security, and sustainability.
We had the highest education budget in Medellín’s history. With one of the flagship programs, we managed to return more than 8,000 children who were outside the educational system for various reasons to the classrooms. We also gave more than 43,000 scholarships for higher education. That is the best strategy for security in the long term—giving opportunities to succeed within the framework of legality.
On security, we dealt forceful blows to structures that had been operating for decades. The security issue is still quite complex. There is criminality, but it is much quieter than that of the cartels of the 1980s and 1990s. Our approach involves more than police strategies—it is a comprehensive model that provides opportunities and builds trust, fights crime, and focuses on strategic social investment by the state where there had previously been a vacuum, allowing lawlessness to prevail.
On sustainability, the first thing we did was to put air quality on the city’s agenda. Due to Medellín’s topography and winds, air quality decreases significantly twice a year: March and October. Institutions had the data on this for years without sharing it with the public. People thought smog was haze. We started by openly recognizing the problem. Then we set out to become Latin America’s capital of sustainable mobility: we added 65 electric buses to the city’s fleet, and the older buses were renovated with clean technologies.
New Metrocables (the city’s gondola lift system), 80 kilometers of new bike paths, and more sidewalks. We finished the technical, legal, and financial structuring of a new tram in the western part of the city. We also started a pilot of 100% electric taxis. I am an advocate of public transportation. Few things are more democratic than a good public space and a good system of mass public transport.
We also created 36 green corridors that open up the most congested roads in the city, and we planted more than 890,000 trees.
F&D: Describe some of Medellín’s most innovative achievements.
Gutierrez: Some call what has happened here ‘The Medellín miracle.’ But this was no miracle. It reflects many years of hard work.
For example, with the help of the business sector, we launched ‘Weaving Homes’ (Tejiendo Hogares), a commitment to building social fabric through training in positive discipline for families.
We understood that it was useless to have the best neighborhood infrastructure if what happened inside homes included violence against women and children.
We also launched Medellín Embraces Its History (Medellín abraza su historia) to memorialize the fight for the culture of legality, which included an upgrade to the House of Memory Museum, filming documentaries, and demolishing the Monaco building -- Pablo Escobar’s former residence -- to create space for a memorial park honoring narcoterrorism victims. We also created Parceros -- “Buddies” -- a program focused on recovering young people from criminal activity.
We have built an institutional framework to support social investment. Successive administrations have given continuity to city projects with the understanding that things do not simply start afresh every four years with an election.
F&D: How did you ensure that Medellín stayed on track?
Gutierrez: Medellín’s success is based on its people and shared trust. The long-term process of rebuilding the city is a collective endeavor. Nobody succeeds in isolation.
The first step was to acknowledge results achieved in the past, continuing but also building on them, bearing in mind that a leader’s time in office is short. We improved the quality of life, as shown by the fact that we have reached our highest point in the multidimensional quality of life index.
We invested resources efficiently and transparently where needed—not where we would have garnered the most votes. We took action in areas where the city continues to reap benefits even today: fighting crime and standing up for law and order, raising awareness about the environment and air quality, curbing the school dropout rate, making a bid to become a Latin American champion for sustainable mobility, and showcasing Medellín as an affiliate center for the fourth industrial revolution.
F&D: How did you learn about the people’s needs?
Gutierrez: For years I walked the streets of Medellín, talking to people even before I became mayor. As a leader, you must know how to listen, put yourself in somebody else’s shoes, and understand their daily struggles.
Medellin-based multinational utilities giant EPM announced July 10 that it supports Medellin Mayor Daniel Quintero’s new decision to postpone debate on a proposal that would vastly expand EPM’s areas of business.
The proposal (see Medellin Herald July 3, 2020) would have EPM launch into whole new areas nationally and internationally, including highway and mass-transit infrastructure projects, manufacture and supply of renewable-energy systems and services, and a vast array of commercial services for consumers and businesses.
However, Medellin Mayor Daniel Quintero announced late last night (July 9) via his Twitter account that “social sectors and some businesses have asked us to withdraw the [proposed] project so that it can be discussed inside and outside the [City] Council in working groups. I always like to buy time and move fast but in this they are right. The project will be presented in October. In the meantime, we will create working groups with unions, citizens and social leaders to build together the future of our EPM."
Then today (July 10), EPM announced via its official Twitter account that “we want to lead technological innovation processes, taking care of the environment, guaranteeing well-being and quality in services. That is why we support the decision of our Mayor Quintero and we continue with the purpose of working on this initiative.”
Prior to the new EPM and Mayoral decisions to postpone debate on the proposal, Medellin City Council President Luis Bernardo Vélez announced July 8 that “changing the corporate purpose of [EPM] requires in-depth study, and that task must be addressed before making any decision that affects the interests of citizens.”
In the proposal, EPM and the Mayor prudently warn that while public utilities need to expand and evolve in order to survive in an ever-more-competitive business world, EPM must be careful to avoid undercutting its exceptionally good bond ratings with both Colombian and foreign investors. The issue: Big expansions into new business areas potentially could violate existing bond covenants -- possibly triggering massive, expensive prepayments -- and potentially could harm loan terms and interest-rates on any future bond floats, the proposal adds.
Meanwhile, on the bond front, EPM general manager Álvaro Rendón López on July 8 hailed a just-completed peso/dollar bond-float totaling US$751 million.
The float included COP$635 billion in peso-denominated debt (equivalent to US$176 million) plus another US$575 million in dollar-denominated debt, with investors in the United States, Canada, Europe, Asia, Chile, Peru and Colombia eagerly gobbling-up the offer -- actually demanding 3.4 times the total amount offered by EPM, Rendón noted.
“With this operation, EPM becomes the largest issuer of bonds denominated in Colombian pesos in this [international] market, this being its fifth operation which includes this [combined peso-and-dollar] financing method,” according to EPM.
“The placement results are a reflection of the credibility of local and international investors in EPM’s financial strength, even amid the current circumstances of uncertainty in the economy worldwide due to the effects caused by the Coronavirus pandemic,” Rendón said.
“The international bond issue received an investment grade rating, equal to that of EPM, by the firms Fitch Ratings and Moody’s,” EPM added. “For Fitch Ratings, EPM’s ratings are the result of the company's low commercial risk, thanks to its diversification and characteristics as a provider of public services.
“For its part, Moody’s affirms that ‘EPM's ratings reflect its consolidated and diversified income base by sector, with the electricity distribution business having the largest contribution to EBITDA.’”
Medellin-based electric power giant EPM revealed July 8 that it has now spent 95% of its COP$1.2 trillion (US$330 million) budget for social and environmental projects in 13 municipalities around its 2.4-gigawatt “Hidroituango” hydroelectric project in Antioquia.
The massive spending is benefitting both people and the environment in-and-around the towns of Briceño, Ituango, San Andrés de Cuerquia, Toledo, Valdivia, Yarumal, Buriticá, Liborina, Olaya, Peque, Sabanalarga and Santa Fe de Antioquia, according to the company.
Among the latest beneficiaries are several more families getting brand-new apartments in the municipality of Ituango, where EPM also built an adjacent sports hall for recreation.
“In the seven years of execution of the social investment plan, numerous actions have been carried out to contribute to the improvement of [highway and bridge] connectivity, infrastructure in education and housing, health conditions and food security of the communities,” according to the company.
“To facilitate the connectivity of the region’s inhabitants, the Hidroituango project has contributed to the recovery of 1,218 kilometers of secondary and tertiary roads [as well as] bridleways [for horse- and foot-traffic],” according to EPM.
As for nutritional food security, EPM identified 3,785 families for “training, technical assistance, tools, supplies, and fertilizers to create and maintain their own crops. In total 3,065 hectares were intervened in 378 outlying neighborhoods to make these productive projects a reality,” according to the company.
“In addition, 2,300 families benefited from the ‘Maná Project’ via the creation of vegetable gardens and the establishment of productive ventures,” according to EPM.
In housing, EPM has delivered to date new residential units for 52 families and "contributed to improving the conditions of 659 other homes," according to the company.
As for education, EPM “contributed to the improvement of 71 educational establishments, which consisted of adapting classrooms, libraries, dining rooms, recreational spaces, among others, and built seven new training centers,” according to the company.
As for health, EPM “invested resources in facilitating access to formal health care networks, with improvements and equipment provided to a health center, provision of two ambulances and health care services for 12,463 people. The ‘healthy schools’ program also was implemented in 10 educational institutions,” according to the company.
As for public utilities, 5,489 more families were connected to natural-gas service, while eight aqueduct and sewer master plans were developed.
As for reforestation, EPM is restoring 24,530 hectares of vegetation in the Cauca River canyon to compensate for inundated lands behind the dam.
“The actions carried out include planting 70 native species typical of the dry tropical, humid tropical and premontane forests,” according to the company.
“In the 12 years that the project has been under development, EPM has acquired 24,530 hectares, mainly in areas surrounding the reservoir and areas degraded by the gradual actions of different economic activities in the municipalities of Buriticá, Liborina, Sabanalarga, Peque, Ituango, Toledo and Briceño,” according to EPM.
The land acquisitions “offset the impacts caused during the construction of the dam reservoir, main works, access roads and future operation of the hydroelectric project,” according to the company.
The 20-year reforestation and conservation plan includes “4,137 hectares of tropical rain forest, 13,860 hectares of tropical dry forest and 6,532 hectares of damp, premontane forest,” according to EPM.
“Ecological restoration actions not only include the planting of native species, but also involve the analysis of coverage, connectivity, landscape, flora and fauna [in order to] set feasible restoration goals to achieve recovery of soils, water resources and biodiversity.
“In the project’s area of influence, studies and monitoring carried out by biologists, agronomists, zoologists and experts in other disciplines have so far registered nearly 16 species of amphibians, 36 reptile species, 300 bird species and about 36 mammal species,” the company added.
Medellin Mayor Daniel Quintero announced July 2 that the city has just added 1,000 more epidemiological trackers to help the city stem the rise in Covid-19 cases.
Simultaneously, Medellin debuted an on-line database and mapping program (see: https://www.medellin.gov.co/irj/portal/medellin?NavigationTarget=navurl://48b007fc8d7912ef960824275ea1cb7a ) so that citizens can see exactly where Covid-19 cases are appearing daily, along with total numbers of active cases, recoveries, hospitalizations, intensive care unit (ICU) capacity and continuing progress in adding more hospitalization capacity.
“We are doubling the number of people in the ICU every twelve days,” Mayor Quintero warned. “The graph [showing the rise in cases] will continue to rise because we are seeing the strongest outbreaks and our responsibility is to make [control] decisions and do them on time,” he added.
Currently the city has 507 ICUs available -- and on July 2, the national government donated another 50 Covid-19 ventilators to the hospital network here. In addition, the Avenida 80 clinic -- dedicated specifically to future Covid-19 patient care -- is now ready to start operating “when required,” he said.
Mayor Quintero also announced that he expects Colombia’s medical-device regulatory agency Invima to endorse clinical tests of the relatively low-cost Covid-19 ventilators developed in the “InnspiraMED” initiative by the University of Antioquia, the School of Engineering of Antioquia (EIA University) and Sampedro Medical Industries.
On a related front, Medellin will crack-down on irresponsible drinking-and-socializing behaviors that usually peak during weekends and holidays, he said.
The crackdown – which will continue until the Covid-19 epidemic eventually declines – includes a ban weekend/holiday sales of liquor, as well as police break-ups of group parties that usually ignore social distancing and face-mask mandates.
These measures are “motivated by more than 1,800 interventions to parties that the police carried out during the last [Father’s-Day weekend] holiday by order of the municipal administration, and taking into account that currently Medellín has 1,276 active [Covid-19] cases, with 890 recoveries, 102 hospitalized patients and 15 fatalities,” according to the Mayor’s Office.
Meanwhile, ICU occupancy at city hospitals has reached 19.7% precisely because of rising Covid-19 cases – about half of which includes patients from other departments outside Antioquia.
“Medellín has become a world example thanks to the use of cutting-edge [Covid-19 tracking and control] technology, the discipline of citizens and ability to anticipate the decisions of other authorities,” according to the Mayor’s Office.
“So far, we have gained time and made progress in economic recovery, while increasing hospital capacity, enabling the 'Avenida 80' clinic, continuing the development of [locally made, relatively low-cost] ventilators, and equipping the city with more tests.”
Nevertheless, “we cannot claim victory,” Mayor Quintero added. “We took the virus very seriously at first when others believed it was a simple flu, and now that a more difficult stage is coming, we will not let our guard down,” he said.
Unless citizens and businesses strictly follow biosafety protocols, then “this could lead to crises like those of other cities in the country. It cannot be overlooked that Colombia has already exceeded 100,000 cases of coronavirus,” Quintero said.
“Thanks to the follow-up that we do for each of the cases, we have detected that most of the people who are in an ICU today did not take care of themselves, did not recognize the symptoms, never called the ‘123’ [emergency hot-line] and allowed the disease to worsen,” he added.
From now on, all citizens should contact the “123” hotline even if they have only mild symptoms, or if they have contacted their “EPS” health-care/insurance network to report any symptoms, Quintero added.
Medellin-based multinational utilities giant EPM revealed in a June 29 filing with Colombia’s Superfinanciera oversight agency that it has pledged to give 55% of all its profits in 2020 through 2023 to the city of Medellin – its sole shareholder.
According to the filing, 25% of profits will go directly to the city while another 30% of “ordinary surpluses” also will go to Medellin, hence a total of 55% of profits.
The pledge is contained in “Municipal Agreement No. 02 of 2020 - Development Plan of Medellin, Medellin Futuro,” according to EPM.
“This 55% percentage has been stable since 2012 in the EPM surplus distribution structure to the municipality of Medellín,” the company added.
Medellin and certain other parts of Colombia are now recognized nationally and internationally for outstanding efforts to minimize Covid-19 outbreaks while carefully reopening commercial and industrial sectors -- saving millions of jobs and avoiding economic disaster.
However, a relatively few irresponsible people are threatening to wreck the great sacrifices and personal discipline performed by the vast majority, as Colombia Health Minister Fernando Ruiz announced June 24 in a nationally televised address accompanied by Colombia President Ivan Duque.
Minister Ruiz and President Duque cited irresponsible social behavior in certain areas of some cities during the recent tax-free sales day (June 19) as well as the just-ended Father’s-Day three-day weekend, where police broke-up more than 3,000 illegal crowds and reckless parties -- 200 of which were in mainly low-income neighborhoods in Medellin.
“This leads us to the conclusion that we really have to put a brake on these cases and that we must work harder on self-care,” Ruiz said.
In the past two months, cases of irresponsible behavior including mass gatherings, drinking-and-dancing parties, lack of social distancing and failure to use face masks caused serious outbreaks of Covid-19 and scores of deaths, especially in the Caribbean coastal cities of Cartagena and Barranquilla, Ruiz noted.
But follow-up crackdowns by the Health Ministry in coordination with local mayors and police have since helped to quell these outbreaks and dampen the rise of fatalities in certain cities, he noted.
“Through targeted actions, intervention in [Covid-outbreak] neighborhoods, agreements between the EPS [health-care networks] to carry out massive testing, isolation and increasing our attention span has generated [better] results,” according to the Ministry.
“We do not claim victory, but [outbreak] cases have been reduced significantly,” according to Ruiz. “Already in Cartagena [Atlantico department] and Leticia [Amazonas department] we have seen 33% of those infected already recovered.”
Barranquilla likewise “has to do the same: [epidemiological] fences in neighborhoods and actions that invite social discipline,” he added.
As for the massive increase in shopping during the special June 19 tax-free shopping day in Colombia, most commercial establishments and most shoppers complied with Covid-19 biosafety protocols, he noted.
However, certain shopping areas in some cities – especially those offering huge discounts on home appliances, computers, televisions and cell-phones – saw overflow crowds, which sometimes defeated social-distancing, he said.
So, for the next two tax-free shopping days scheduled in July, “electronic [internet] purchasing and other mechanisms will have to be increased to be able to contain” overcrowding, he warned.
“It is very difficult to keep the population in isolation on a mandatory basis, so we have to generate more capacity for self-care -- and that only develops by opening the economy gradually and that the population demonstrate their capacity [for biosafety compliance] and learning, “ Ruiz concluded.
Medellin Mayor’s Office Praises General Compliance
Meanwhile, according to the Medellin Mayor’s Office, “almost all of the commercial establishments reported a positive [tax-free-sales] day thanks to compliance with all biosafety regulations.
“Despite this, a chain store located in the city center had to be closed preventively due to non-compliance with its protocols. The municipal administration accomplained health authorities to control this situation and protect the integrity of citizens.”
Medellin Secretary of Economic Development Alejandro Arias García added that “merchants tell us that they have increased their sales five times compared to what they had been reporting in recent weeks. This is very positive because it reaffirms that citizens believed in this event, are privileging online shopping and, in most cases, having exemplary behavior at points of sale.”
According to commercial trade association Fenalco Antioquia and Colombia’s Ministry of Commerce, local retailers saw a 30% increase in sales even compared to a typical day before the Covid-19 pandemic started four months ago.
Meanwhile, since Covid-19 tracking started four months ago, Colombia’s Health Ministry has now recorded a cumulative total of 77,113 cases nationally, with 2,491 deaths and 31,671 recoveries (as of June 24).
Bogota is worst at 23,367 cases, followed by Atlantico (17,972); Cali/Valle del Cauca (8,342); Bolivar (7,473); Antioquia (3,239); Nariño (2,814); Amazonas (2,220); Cundinamarca (2,182); Magdalena (1,390); Meta (1,159); and Choco (1,148).
Of the Antioquia cases, Medellín to date accounts for about one-third of the departmental total: 1,321 cases, of which 665 are still active, 649 recovered and seven deaths.
Antioquia Government Urges Self-Quarantines
Meanwhile, the departmental government of Antioquia announced June 24 that any shoppers who ignored social distancing at certain locations during the tax-free shopping day (June 19) now ought to remain at home for the next 14 days.
“The incubation time for the virus that produces Covid-19 can be from two to 14 days,” the Antioquia departmental bulletin noted.
“This is the time between the day of infection and the day of symptom onset. People can transmit the virus starting two days before presenting symptoms. Therefore, if you were infected on Friday, June 19, it is possible that you will start transmitting the infection to others from today and in the following days, even if you do not have symptoms yet.
“Based on these scientific data, we want to invite all people who attended shopping last Friday (June 19) and who were anywhere when infection-prevention measures were neglected to follow the following recommendations:
“1. Stay home in the next 14 days. Avoid going to appointments or to the market. If you have scheduled surgeries, then postpone them. Use electronic means to do meetings and errands.
“2. Wear a surgical mask and do not remove it while you are away from home, and even more so if you have people within two meters.
“3. Wash your hands frequently with soap and water or glycerinated alcohol.
“4. Immediately notify your Covid-19 hotline if you develop a fever, cough, shortness of breath, general muscle pain, headache, sore or sore throat, loss of smell or taste.
“5. If you live with people over the age of 70 or who suffer from hypertension, diabetes, kidney disease, liver disease, chronic lung disease, cancer or immunosuppression, avoid approaching them within two meters in the following 14 days. If these people are scheduled for surgery, then they are also recommended to postpone their surgeries.”
Wall Street bond rater Fitch Ratings announced June 12 that it affirmed the city of Medellin’s long-and short-term debt at relatively favorable “AAA (col)” and “F1 + (col)” ratings.
“The outlook for the long-term rating is ‘stable,’” according to Fitch. “The affirmation of the ratings took into account the situation of economic stress as a consequence of the contingency derived from the Coronavirus,” according to the analyst.
“Furthermore, it reflects Fitch's expectation that Medellín will preserve stable budget performance and adequate debt with an expected repayment ratio that will be in a range greater than five times (5x) and debt service coverage that will be in a range 1x to 1.2x in the medium- term, in line with the results of the previous review.
“Although the most recent financial information available from Medellín may not yet reflect any financial deterioration, variations in the behavior of income and spending could materialize in the following weeks or months as the impact of the Coronavirus and less dynamism on economic activity is perceived,” the analyst cautioned.
Unlike some Colombian cities, “Medellin’s operating income structure has a relatively low dependence on national transfers,” according to Fitch.
“Medellín’s tax revenue represented on average 45.9% of operating revenue in the last five years (2015 to 2019) and showed an average annual growth rate of 6.2%. Medellín presents in its structure of this type of income a participation of 40.8% of the unified property tax (IPU) and 35.2% of the industry and commerce tax (ICA).
“Both have shown low volatility in recent years, thanks to the municipality’s fiscal management model and a positive taxpayer payment culture. However, these rents are expected to drop considerably as a result of quarantine restrictions in the municipality due to the coronavirus pandemic.
“Total ownership of Empresas Públicas de Medellín (EPM) has been a key factor in the municipality’s financial performance and an outstanding source of resources, since a significant amount of ordinary and special financial surplus transferred to Medellín [from EPM] has increased its financial flexibility to make capital expenditures.
“This also places Medellin in an incomparable position with respect to other cities in the face of the current health crisis. The financial surpluses [EPM] delivered to Medellín in 2019 reached COP$1.3 trillion [US$344 million] or 55% of the company’s 2018 profits.
“Medellín has financial autonomy and the power to adjust the rates for most of its taxes within the limits defined by the national government. Therefore, in the event of a further need to increase its own income, it is expected that Medellin could cover [via a special tax hike] at least 50% of a reasonably expected decrease in income [from Coronavirus economic downturns].
“In addition, the rates of the IPU [property tax] in the municipality are below the legal limit and the municipal taxpayers have a relatively high affordability to address possible rate increases," Fitch's report notes.
Meanwhile, during the last five years, "Medellín's tax collections have a positive trend due to good management of the fiscal model, a culture of payment by taxpayers and the economic performance of the region," according to the analysis.
“Despite the extraordinary expenses that will be incurred to contain the health contingency, Fitch forecasts that operating expenses will remain under control for the rest of the current administration and estimates an average annual growth of 5.7% for the period 2020 to 2024. To meet the contingency, Medellín has released budget resources for COP$236 billion [US$62 million], equivalent to 4.2% of total revenues generated in 2019.
“At the end of 2019, the balance of Medellín’s debt was COP$1.9 trillion [US$503 million]. About 34.6% of Medellín’s direct debt was denominated in foreign currency -- contracted with the French Development Agency for the Medellín 'green-corridor' program -- and about 65.3% was linked to a variable interest rate.
“The municipality has a current issue of internal public-debt bonds that represent 13.2% of its direct debt and correspond to a sixth bond issue for COP$248 billion [US$66 million], whose maturities are in tranches for 2024 and 2044.
“Fitch considers that Medellín has better liquidity management, which is reflected in a stronger liquidity position and greater access to short or long-term loans with local banks, whose counterparty is rated ‘BBB-’. In addition, Medellin can access Treasury credits for up-to-one-twelfth of its current income, which must be paid at the end of the term," the analysis adds.
What's more, “Fitch includes in its analysis the way in which Medellín recognizes the obligation with the national government to finance the original infrastructure of the Medellín Metro and considers it as an inter-governmental obligation. Thus, Fitch performs a complementary calculation, called the improved repayment ratio, which excludes this obligation from the debt sustainability metrics to estimate a potential improvement over the individual credit profile (ICP).
"Currently, the Medellín ICP is strong enough to support current ratings, so this improvement is not applied,” the analysis concludes.
