While it took a year for the Colombian economy to return to pre-pandemic production levels, the department of Cesar still cannot recover it. According to recent data from DANE when comparing the economic behavior of the country’s departments between 2019 and 2023, Cesar has the worst performance of all with a drop in its economy of 5.1% (Table 1).
The consequences of this are critical for a department that already has 52% monetary poverty, 13% unemployment in its capital and a high level of questioning of its political leadership, due to its ineptitude in the investments made (constant budget additions to contracts and non-compliance in the delivery of works). The gaps in terms of access to services, monetary and multidimensional poverty and education have deepened in the department, due to three conditions in the opinion of CESORE.
The first lies in the sectoral composition of the department. Table 2 shows the growth of each economic branch and its weight in the department. The high dependence of the department on a product – coal – restricts it to how coal does, so does the department and this sector suffered a drop of 33.3% in those 5 years. What alleviated this resounding fall was the positive behavior of the other sectors of the Caesarense economy: Agriculture, Culture and Recreation, Finance and Insurance, ICT and Construction.
Much of this drop is due to the closure and return of the Prodeco company’s mining titles in 2021. In 2019 the company produced 15 of the 52 million tons of thermal coal (28.8% of the total). Another CNR company also had difficulties in its production process. In such a way that we must continue to insist, as CESORE has been doing for several years, on promoting the productive diversification of Cesar’s economy and taking steps towards a post-coal economy, greener, more inclusive and more regenerative.
However, not everything is explained by sectoral economic dynamics. The second reason lies in the inability of budget execution to counteract the decline in the mining sector. In 2023, the country experienced a public spending execution of 85.5%, the lowest in the last decade (Table 3). The outlook is much more discouraging if we consider that investment execution was only 70.5%. According to data from the departmental Comptroller’s Office, El Cesar is no stranger to the national situation. With a spending execution lower than the national level (77.3%) of 8.2 percentage points (pp), and 4.8pp in the case of investment execution (65.7%).
This means that, of every 100 pesos that were budgeted to execute in Cesar, only 77 were actually spent. As a consequence, the intended effects of the social and investment programs are diminished and therefore the gaps in economic development are much wider than they would be if the entire budgeted amount were executed.
This is a structural problem for the department, prior to the pandemic. A report carried out by the Committee for Monitoring and Evaluation of the Investment of Royalties in Cesar (Csir), during the period 2016-2019, showed that low budget execution is a constant in the department. Despite the approval of numerous investment projects, many of them have not been completed due to deficiencies in planning and execution. Furthermore, the lack of effective monitoring and supervision has led to significant delays and inefficiency in the utilization of resources.
To date, many of these projects still have cost overruns. It is estimated that the Vallenato Cultural Center (200 billion pesos) would cost 3 times more than the remodeling of the Movistar Arena in Bogotá (70 billion pesos).
Finally, a third reason lies in the lack of efficiency and correct use of resources. According to the Departmental Performance Measurement (MDD) made by the DNP in 2021, the Cesar department ranked fifth among the departments with the lowest MDD and the second with the lowest score in the Execution category. This index evaluates not only the execution capacity, but also Resource Mobilization, Open Government, Planning, Management and Education. Added to the above is the diversion of resources. In Cesar, the governor and mayors have been convicted of acts of corruption. Questions from civil society are permanent regarding the lack of relevance of public spending, with excess in pharaonic works and insufficient in unsatisfied basic needs.
In conclusion, the combination of a significant drop in coal production, poor execution of public policies and the improper diversion of resources has plunged the economy of the department of Cesar into a recession. The lack of economic diversification and inefficiency in the management of public funds have exacerbated structural problems, preventing an effective post-pandemic recovery.
To boost Cesar’s economic recovery, we reiterate it is crucial to implement an economic diversification strategy that gradually reduces dependence on the mining sector. Encouraging the development of industries such as sustainable agriculture, tourism and information technologies can generate new sources of employment and growth. Finally, it is essential to improve monitoring and transparency in the management of public resources. The implementation of robust auditing and citizen participation mechanisms will guarantee greater efficiency in the execution of policies and projects, reducing corruption and optimizing the use of funds for regional development.
By CESORE
Fernando Herrera Araújo. Director CESORE
Jorge Guerra. CESORE Economist
