The draft General Budget of the Nation for next year faces a rather strong storm in the Congress of the Republic, since its income accounts are not convincing and this has generated a marked division in the Legislature, where on the one hand there is a request for a cut of at least $12 billion, while the Ministry of Finance reiterates that this will not happen, since all the money is needed.
Of the $523 billion requested by the Petro Government, at least $24.1 do not have a solid basis in revenue, since they depend on factors such as the financing law, advancing the fiscal rule and the efficiency in the collection by the National Tax and Customs Directorate, an entity that failed during the first semester precisely in that matter and raises doubts for the future.
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Recently there have been several alerts regarding the capacity of the Dian to collect taxes would have been overestimated again and that although the projections presented this year are more realistic than those of 2023, they ignore the problems faced by the tax authority, mainly due to the lack of personnel and equipment to do its job better.
Carf Review
One of the first bells came from the Autonomous Committee of Fiscal Rule (Carf), which in its analysis of the 2025 PGN project reviewed the projected collection of $29 billion within the Dian management concept, which in its calculations increased by $14.8 billion compared to the Medium-Term Fiscal Framework socialized in the middle of the year.
Taxes
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On the other hand, in general accounts it states that there are significant risks in the Government’s revenue projection for 2025, highlighting that they include an increase of $31 billion, of which $14.6 billion depend on a greater collection capacity of the Tax Directorate and in this sense argues that the increase is a high risk in terms of feasibility.
“The addition of personnel at the Dian, key to the increase in tax collection, has only reached 51% by June 2024, and is projected to cover 66% by December 2024. Given this pace, it is expected to complete the necessary staff in 2026, which could delay the positive impact on collection projected for 2025. In addition, more time will be required to implement advanced technological systems,” they explained.
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Based on this, he proposes that the concept of “collection by management”currently poses a risk of defunding the Budget of more than $22 billion, since of the $29 they plan to obtain, the CARF believes that only $6 billion would remain, which would enlarge the fiscal gap for next year and could repeat the cut scenario that originated in June due to the drop in income from litigation and arbitration.
“The assumption of increased revenue collection by the Dian for 2025, although feasible in the medium term, presents a significant risk in the short term, given the delay in the incorporation of personnel and the extension of the schedule for the technological modernization of the entity,” concluded the CARF.
Numbers in red
Starting from the $22.6 billion calculated by the Carf, the former Vice Minister of Finance Andrés Pardo says that the gap is bigger than what is thought, since to these must be added the items that depend of the financing law, with which the deficit accounts reach $40 billion.
Debate on the amount of the General National Budget.
Courtesy – Ministry of Finance
“The 2025 budget project includes $28.6 billion in increased revenue from the Dian (1.7% of GDP), higher than the $14 billion (0.8% of GDP) that had been included for the same concept in the Fiscal Framework (MFMP 2024) of June. This figure is not realistic,” said this economist.
Pardo Amézquita added that the “Minhacienda estimates that in 2024 The collection by Dian management will be 0.2% of GDP or about $3.5 billion and in the Fiscal Framework of June that estimate had already been reduced for 2025 from 1.3% to 0.8% of GDP, so in an optimistic but achievable scenario, that value will hardly exceed $7 billion in 2025. That is to say that at least $20 billion have a highly uncertain source.”
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It is worth noting that this gap must now be added to the fiscal burden that will be generated by the agreement between the Government and the truckers, which is estimated at more than $7 billion in the best case scenario for 2025 and in this way, the money that would be missing for the budget for the next year would easily be around $40 billion, making it clear that an urgent cut in spending is needed to preserve fiscal stability.
Hiring is moving forward
According to the National Tax and Customs Directorate, at this time are advancing in the final stages of the Merit Contest 2497 of 2022, which offered a total of 4,700 jobs, advancing the respective tiebreakers of the eligible candidates who have the same score, city selection hearings in conjunction with the National Civil Service Commission and induction course, actions that must be developed prior to issuing the administrative act of appointment on probationary period.
Budget.
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“An external factor that has impacted the provision process is the presentation of 1,077 writs of protection that have affected the provision of 1,806 No. 061 vacancies during the process, altering the planned schedule both in the issuance of lists of eligible candidates and in the times of the hearings, other stages prior to the appointments and possession of the eligible candidates,” they explained.
The entity concluded by saying that “of the 4,700 jobs announced, 1,577 appointments have been made in a trial period, 2,612 in stages prior to appointment, of which 996 were in a repeat hearing for the selection of positions by court order of protection and 71 vacancies were vacant. On the other hand, no vacancies have been issued lists of eligible candidates for 384 appointments similarly affected by judicial pronouncements.”
