(Bloomberg) -- A leaked audio of a foul-mouthed tirade by President Gustavo Petro’s 2022 campaign chief has frozen the government’s bid to overhaul Colombia’s welfare state, as the Lower House suspended debates on key legislation. 

In the recording published by Semana Magazine on Sunday, Petro’s former ally Armando Benedetti expresses anger at how he felt the president had treated him, and threatens to reveal dirt about how last year’s presidential campaign was funded. 

Petro fired Benedetti as Ambassador to Caracas on Friday amid a widening probe into allegations of phone tapping and abuse of power. Semana didn’t say how it obtained the recording, apparently of communications between Benedetti and Petro’s cabinet chief Laura Sarabia, who also stepped down on Friday.  

The case risks hurting Petro’s alliance of leftist parties ahead of regional elections in October. The government is currently battling to pass ambitious bills in congress to overhaul the Colombia’s pension and health system, and its labor market. 

On Monday, Lower House leader David Racero told reporters that lawmakers have halted their discussion of reforms until the ruling coalition is “rebuilt”. 

Read more: Phone Tapping, Polygraph Scandal Roils Colombia Government

In a tweet on Sunday night in response to the leaked audios, Petro denied having broken campaign finance rules, or having ordered any phone taps. In a separate tweet, Benedetti said the audios had been manipulated. 

Hanging by a Thread

The scandal, falling popularity and the fraying coalition mean that Petro’s ability to pass reforms is “probably dead”, said Andres Mejia, a political consultant and guest lecturer at the business school of Bogota’s Los Andes University. 

“Petro will have to spend lots of his time and energies battling allegations,” Mejia said, in a written reply to questions. 

Benedetti’s outburst will cost Petro support within the Green Party and the Liberal Party, his coalition allies, said Jorge Restrepo, an economics professor at Javeriana University in Bogota. 

“The coalition was hanging by a thread,” Restrepo said. “This will maybe make that thread break.”

Petro’s reforms were generally unpopular among investors, and the peso rallied the most among major emerging market currencies on Monday, while local government bonds also gained. The currency was also boosted by higher price for crude, the nation’s biggest export, after Saudi Arabia announced an extra 1 million barrel-per-day supply cut.   

(Updates with Lower House comments from first paragraph, market reaction in final paragraph.)

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