The Autonomous Fiscal Rule Committee presented this Wednesday – April 16 – the update of its fiscal review for Colombia, with a cut to the fourth month of 2025, in which it warns that the financial situation remains challenging, since it continues to spend more, the deficit remains fly, the income grows at an insufficient rhythm and The nation’s box is still tight and at its lowest levels in history.
First, the CARF said that, with a cut to February, the primary fiscal deficit – which excludes interest expense – was higher than that required to comply with the fiscal rule in accordance with the 2025 financial plan; with data that reiterate the call to the Ministry of Finance start to spend less.
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“Indeed, the primary balance was -0.9% of GDP, while the goal of the financial plan is -0.2% of GDP. The above puts the need to generate primary surpluses in the coming months,” they said.
On the other hand, in what has to do with tax revenues, they indicated that These have an annual nominal growth of 6.2%, which although it is good news, does not opaque that they are much lower than that required to comply with the goal of collection of the financial plan (22.7%).
Autonomous Fiscal Rule Committee – CARF
Courtesy – API
“The gross collection was $ 49.4 billion with cut to February, consisting of real growth (discounting inflation) of 0.9% per year. External taxes and, to a lesser extent, VAT, they march the increase in government current income of the government,” says the report.
A third element reviewed by this agency was the fiscal expenditure of the Central Government estimated by the CARF, compared to which they informed that it is significantly above the average expenditure in the first quarter of the last five years. The total expenditure, measured through payments, was 5.3% of GDP with cut to March, upper figure to that registered in the same period of 2024 (5.1% of GDP) and the average of the last five years (4.5% of GDP).
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“The dynamics of spending in the first quarter of 2025 has been related, in part, to the successful government strategy of accelerating the payments of the budget reserve (unfolding commitments) constituted in 2024 and the floating debt (which can reduce expenditure pressures in subsequent months),” they said.
At this point they warned that the high fiscal deficit, and the high execution of expenses Corresponding to the current validity that typically occurs in the last quarter of the year, they reflect the challenges to reach the goals of the financial plan and fulfill the fiscal rule.
Colombian pesos
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Tight box
The Fiscal Rule Committee also stated that the position of the Government Box called Pesos remains critical, since with a cut at March 31, government deposits in the Bank of the Republic were $ 10 billion, the minimum level for that month since there are records and evidences a deterioration with respect to February 2025.
“Government financing costs remain high and growing. The average rates of public debt titles called in pesos increased 80 basic points between February and March. The long -term titles presented the greatest devaluation, which could be related to the fragility of the fiscal position. The differential between the cutting rates of the auctions and the coupons Of the public debt titles it is more than three times higher than that observed a year ago, ”they said.
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Finally, they reported that February data reflect that the country allocated near a third of tax revenues to interest payment, which remains space for social and productive spending. It is estimated that between January and February the interest expense represented 29.8% of the tax collection, that is, 9 percentage points more than in the same period of 2024.
“In the last month, the credit default swap, CDS, an indicator that measures the perception of country risk, has evidenced an accelerated and more pronounced increase in the risk of Colombia than that of other countries in the Latin American region. Lor previous one occurs in a context in which the country’s risk premiums have remained at higher levels that those of the pairs of the region, in recent years, ”they concluded.
