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(Bloomberg) — Colombia’s electricity tariffs and rental prices are the main drivers of inflation, and the government wants lawmakers to change legislation that regulate such costs, President Gustavo Petro said.

While inflation has slowed, high interest rates and energy prices continue to hurt sectors that promote industrial production and homebuilding, Petro told members of the senate and the lower house at the inauguration of the 2024–2025 legislative period. 

“Inflation has two speculative engines: rents and electricity generators,” Petro said Saturday. “We will not be able to develop the industry if we have high interest rates and if we have high electricity tariffs.” 

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The Central Bank of Colombia has lowered rates by two percentage points since December to 11.25%, but borrowing costs remain the highest among Latin American economies. Inflation is at 7.18%, more than twice the central bank’s target of 3%.

Petro and Finance Minister Ricardo Bonilla have asked policymakers to lower the interest rate at a faster pace. Bonilla has a seat on the monetary policy committee.

Production Killer

The president told Congress that high borrowing costs are “killing production” and “condemning people to hunger and poverty.” Recent economic data showed the agriculture sector is boosting economic growth, while manufacturing has contracted in 14 of the last 15 months.

The government forecasts gross domestic product will expand 1.7% this year after growth in 2023 was at the weakest pace since 1999, excluding the pandemic period. The president told lawmakers that the government will send a series of bills to congress to promote economic activity. 

Petro, the first leftist leader in Colombia, won the presidency with a pledge to phase out fossil fuels and replace them with agricultural production and tourism. 

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