Finally, the fate of the financing law was decided, which ended up being sunk in the economic commissions of the Senate and Chamber, and now the question of Colombians is what will happen to the General Budget of the Nation for 2025. since $12 billion pesos depended on this project and were left up in the air.
Although in Congress it was explained that this decision was a coup of authority so that the Petro government has a more conciliatory spirit and does not see them as a notarial procedure, with everything that has happened, uncertainty remains high. about the fiscal future, given that the Nation’s treasury is getting tighter and there is less and less money.
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Similarly, the country avoided a tax change that generated new taxes that were not well regarded by analysts and unions, as was the case of the carbon tax or the VAT exemption for hybrid vehicles, but it also lost the opportunity to create sources of income like that projected with online games of luck and chance.
Diego Guevara, Minister of Finance, indicated that the most affected This will be investment, so now the Government’s priority will be to adjust spending items with a view to maintaining fiscal stability and maintaining the “responsible management” that, from its perspective, has been given to the country’s finances. .
Economic recession
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“Congress has denied investment possibilities, it has denied regional projects, we will insist on the possibilities of continuing to invest. We must tell the country that investment possibilities have been denied, a cut has been made to the budget, this is not a vote against President Petro, but it is a vote against the regions and it is a vote against the investment,” he warned.
Investment blow
According to what is stipulated in the presentation of the 2025 Budget, the total amount is $523 billion, of which $495.7 billion will be financed with National resources and $27.3 billion with own income from national public establishments. Likewise, at the time it was reported that of the total amount, $12 billion are contingent, This means that they are subject to the approval of the financing bill.
Although the final project spoke of a collection of $9.8 billion, the financing law has fallen, the first step to follow is to lower the $523 billion to $511 billion to respect the principle of budget balance stated in the Organic Statute of Budget, according to which, you cannot spend more than you earn.
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In a simple way, according to concepts of the legislation and the Constitutional Court itself“means that the current income (tax and non-tax) of a Nation must be equal to all public spending,” which is not met with the collapse of the rule proposed by the Ministry of Finance.
For Henry Amorocho, professor of public finance at the Universidad del Rosario, in addition to the cut, it is necessary to put on the table that for this year it is projected that budget execution will reach between 77% and 80%, which would generate a surplus of approximately $95 billion that could be allocated to future budgets.
“We see the clear need for a reduction in appropriations so that a budget decree can be issued for the year 2025 for $511 billion pesos. If the Government considers next year reiterating the possibility of carrying out a tax reform, because he will present it and of course he will seek to generate the money he needs,” he explained.
Colombian Pesos
EFE
Amorocho also highlights the need for additional cuts, as suggested by the Bank of the Republic and the Autonomous Committee of the Fiscal Rule, in the amount of $28 billion, all in order to guarantee macroeconomic coherence and fiscal stability, recommending strategic prioritization in spending reductions and close coordination with the Bank of the Republic.
Possible cuts
Mauricio Salazar, director of the Fiscal Observatory of the University, thinks in a similar way.d Javeriana, who points out that the worrying aspect of the cut is that of the $511 billion, “only $70 billion correspond to public investment, which would imply a punishment for this area with a 26% reduction in real terms compared to the budget this year.”
“Given this, we warn that the national government will have the challenge over the next year of making these cuts without affecting the social programs that are in force and the new needs that arise,” he highlighted.
It should be noted that this Observatory published some time ago several recommendations to cut spending, based on operation and not investment, through strategies such as giving greater autonomy to territorial entities in the use of the resources of the General Participation System, eliminate duplication of functions between the Nation and improve the efficiency of social spending.
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The financing law was an initiative that Congress did not like from the beginning and influenced the fall of the budget project for next year, since it was seen as a blank check that the Ministry of Finance wanted to sign. Given this, they proposed discussing things separately, but the Government did not accept and ended up betting on a bet that they lost.
That said Mauricio Piñeros, managing partner of Gómez-Pinzón Abogados and expert in tax matters, indicated that there is no choice but to make an adjustment or reduction in the budget of expenses and investments.
Colombian pesos.
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“The problem with the budget that the President must issue is that the Political Constitution establishes that if Congress does not approve it, the one presented by the Government will govern, for whose execution the Government does not have the necessary resources. In this case they will be forced to issue the budget presented, but they will have to make adjustments to the operating and investment expenses taking into account that they will not have the money to meet the expenses of the budget that was initially presented,” he highlighted.
The Ministry of Finance and President Gustavo Petro will have until December 31 to present the expense and income accounts for 2025, which will finally be issued by decree, after the draft General Budget of the Nation It collapsed due to lack of procedures and differences between the Executive and the Legislative.
