The final stretch for the 2024 fiscal period has begun, in which most of the cards have already been played and analysts, academia and investors; They are more focused on what will come by 2025 and what will happen with issues such as inflation, growth, slowdown and monetary policy, just to name a few.
What happened this year with the Budget, the tax alerts, the adventures that the Ministry of Finance has had to make to comply with the fiscal rule and the possibility that the country risk rating will be lowered again; These are some of the lessons that this year has left and that are asked to be taken into account so as not to repeat them.
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Although everything seems to be on the table and what is expected for the months of October, November and December is not much; There is a front, beyond interest rates, that continues to attract the attention of the market and that is tax collection, since it already had to be adjusted in the middle of the year and despite this, the Government’s goals do not seem to go away. to comply, which would further tighten the Government’s coffers.
At least this is what can be seen in a recent analysis by the firm Dapper, which maintains that as time passes and the country’s fiscal situation becomes more complicated, the chances of a “negative surprise” become greater. in the income for the Nation from collection and there are more doubts about the financial capacity.
Taxes
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The first thing that these experts collect is that during the first three quarters of the year, the accumulated gross collection fell significantly at a rate of 8.2% and due to this, the fiscal deficit has reached $72 billion (4.3% of the GDP), the highest level in twenty years, except for the pandemic.
“Tax revenues present additional downside risks. The fall “In the accumulated collection and the lower price of oil compared to official expectations, they limit the entry of resources from key sectors, including Ecopetrol,” they explained in their report, where they make it clear that all this will influence economic growth.
It is worth remembering that the Autonomous Fiscal Rule Committee (Carf) warned at the time that the low economic growth in 2023, below expectations, negatively affected the collection of income taxes, a situation that, although it was not carefully reviewed in The adjustments of the Minhacienda could generate an additional shortfall of $5.7 billion pesos in net income, added to the non-materialization of better Dian management.
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“By the end of 2024, Dapper estimates that tax collection could be 11.6 trillion pesos below the projected goal, which would bring the total annually to 246.9 trillion pesos, equivalent to 14.7% of GDP,” they reported in their analysis from Dapper.
Future scenarios
That said, the researchers propose a base scenario in which they incorporate a downward surprise in the 2024 tax collection, assuming that the tax collection continues to show under-compliance with the gross collection goal of $8.9 trillion; that if it is projected until December from January, the year could close with an under-fulfillment of the goal by 95.5%, which would imply a gap of $12.6 billion in gross collection.
For this to be fulfilled, the country should have a monthly average of $24.4 billion in the remaining months, a figure that is higher than the $22.9 billion that has been seen during recent months. It is unlikely that it will materialize in its concept, given that the country’s economic dynamics are not the best.
Taxes.
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According to reports from the National Tax and Customs Directorate, as of the ninth month of the year, $206.83 billion pesos have been collected in Colombia; A figure that falls short of the $214.9 billion that were expected to have at this point in the game. It should be remembered that initially the Government’s bets for September were $240.2 billion, but in the Medium-Term Fiscal Framework of June they were cut.
“Reversing the 8.9% drop in accumulated collection during the first nine months into a total collection of 0.2% in the remaining three months requires 100% fulfillment of the goal and taking into account that until now the conditions are not favorable, everything is heading towards results below what is allowed,” they stated from Dapper.
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When comparing the $11.6 billion they project against the drop in tax collection, they concluded by stating that, in amount, they are comparable with the resources currently sought by the National Government through the Financing Law that is warming up and waiting for its first debate in Congress.
Spending cut
This alert is added to the one recently launched by the Bank of Bogotá, that focused their attention on what they described as a “deterioration” in the perception of country risk that could lead to a downgrade of ratings, among other things, as a consequence of the drop in tax collection.
Recession
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“It is estimated that the mismatch could be up to $12 trillion for all of 2024. If this is the case, the adjustment in spending should be even greater, almost -40% annually. With this, the Government has no choice but to cut its spending, since the margin to change the primary fiscal deficit with adjustments to the economic and oil cycles in the RF is almost zero,” they stated.
For both experts, the only way left to react urgently is to review the accounts and the State’s cash, both for the remainder of the year and for the nearest months, and focus on what is strictly necessary, since it is not there is money and continuing to threaten the fiscal rule will work against investor confidence.
