This week, discussions formally begin to define what the future of the General Budget of the Nation for 2025 will be in Congress, amid risks that the Legislature will return this project, arguing that its execution is not viable and there is a high dependence on factors that are not sure to materialize, which could once again lead to a lack of funding in the State accounts.
According to the accounts proposed by the Ministry of Finance, the PGN for next year amounts to $523 billion, of which $328 billion (63%) are allocated to operations, $113 billion (21%) to public debt service and $82 billion (16%) to public investment. Here it should be noted first of all that the investment sector was the most affected.
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Amid the alerts that have been issued for these calculations, especially In operating expenses, and calls for immediate cuts, a new report from the Fiscal Observatory of the Universidad Javeriana maintains that there is a high risk of underfunding, derived from the collection goals that were set for the Dian.
“The amount proposed in the PGN for 2025 represents a 3% growth in real terms compared to this year. This growth is concentrated in the amount allocated to the payment of public debt with an additional $13.1 billion (13%) and the operating budget with an additional $17.6 billion (5%). However, public investment will fall 16% in real terms with $14.8 billion less for next year,” they began their analysis.
Investment
For these experts, we must not lose sight of the fact that the expenditure planned for next year may be underfunded by $31.1 billion, coming from a Financing Law that foresees a collection of an additional $12 billion, $14.6 billion more that would come from the collection of tax management by the Dian and the fight against evasion and an additional $4.5 billion from capital resources. resulting from the profits of Ecopetrol and the rest of the State’s industrial and commercial companies.
“In the event that Congress does not approve the Financing Law, the drop in public investment could reach 30%. In this sense, compliance with the fiscal rule in 2025 will depend on a reduction in spending and the implementation of additional fiscal adjustments if the risks of underfunding indicated materialize,” they added.
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Given this, they advised that in the short term the increase should be rationalized. In terms of operating expenses, in the medium term a reform of the country’s public spending structure is necessary to ensure the sustainability of public finances.
“By sector, the one with the largest budget allocation for 2025 is public debt service with $110 billion, meaning that $21 of every $100 pesos of the national budget will be allocated to the payment of credit obligations. It is important to mention that since public debt is the sector with the largest budget, this reflects a symptom of deteriorating public finances, since most of this item is allocated to the payment of increasingly expensive interest,” they said.
Alternatives for investing your money.
They also pointed out that, in parallel, the largest cuts in the investment category are focused on Social Inclusion and Reconciliation with $5 billion less (−39%), Agriculture and Rural Development with $3.9 billion less (−48%), ICT with $1.4 billion less (−43%), Housing with $1.4 billion less (−24%) and Education with $800 billion less (−9%). However, the fall could be greater if not the Financing Law is implemented, which would cause total investment to fall by up to 30%.
