In recent months, inflation, elections and global aspects, such as the war in Ukraine, have been the center of the Government’s and analysts’ concerns, but beyond them there is another issue that the next Administration will have to face, and that it can even be a ticking time bomb: the tax situation.
(Subsidies have softened the impact of rising prices).
In February the Ministry of Finance presented its ‘Financial Plan’, in which a goal of 6.2% was set for the level of fiscal deficit this year, it was also estimated that the gross debt will close the year at 62.7% GDP, and a tax collection of $183 billion will be reached by December.
These goals could be updated in the coming weeks, when the Treasury delivers its Medium-Term Fiscal Framework in the first days of June, especially due to the growth of the first quarter, higher than expected, since the GDP grew 8.5%.
To that is added that the price of oil has remained around US$110 and the tax collection as of April already reaches $74.53 billiona compliance of 114.6% compared to the goal of the first four months of 2022. All these factors would mean higher income for the Nation.
The Minister of Finance, José Manuel Restrepo, assured this medium that in the last 10 months “It has been possible to reduce the fiscal deficit, or long-term fiscal needs, by practically 3 percentage points of GDP.”
The head of the Treasury portfolio also emphasized that the level of public debt that was expected to be reached in 2032 will be reached a decade earlier, this year, thanks to the best results in terms of growth and collection, and highlighted that in 2021 it was possible to reduce the level of debt to the forecasts that were previously held for 2024.
(Mintrabajo signs decree with public policy of informal vendors).
“All this good behavior of reactivation, additional collection, improvement of income and improvements in the productive sectors can be a trigger to continue on a path of a more accelerated adjustment of public finances, and that will be good news for the future.” the perspective of the next government assured Restrepo to Portfolio.
In fact, the latest figures from the portfolio and from the Directorate of Public Credit show that the Nation’s gross debt reached $745.89 billion in April, 56.6% as a percentage of GDP, under an estimate of nominal GDP for this year of $1.317 billion.
RISK IN SIGHT?
However, despite the good winds facing the national economy, experts point out that not everything is rosy in the face of the fiscal situation.
“There are reasons to be optimistic, but also to be cautious,” says Luis Carlos Reyes, director of the Fiscal Observatory of the Javeriana University. “This increase in oil prices that we see today may stop, and that is an important component of the revenue that is going to allow the government to have some margin”said.
Reyes also recalled that the debt in the last two years has been acquired with lower interest rates, but with the current levels of inflation, this situation could change. “If inflation comes to see a permanent increase, rates will go up, and when this happens, the debt as a percentage of GDP could grow again”, He explained, and recognized that an increase in State revenue is necessary, given the social needs and the spending for it.
For Camilo Pérez, Manager of Economic Research at Banco de Bogotá, “This year and next we could say that we are calm on fiscal issues, because somehow the better growth performance makes all the fiscal figure ratios better. And by 2023 we have a big lottery that we won, which is the price of oil.”
Pérez assured that with the change of government and “Decisions that move away from orthodoxy in the management of fiscal accounts, the consequences would be seen at the end of 2023 and in 2024.”
For his part, the president of the economic studies center Anif, Mauricio Santamaría, assured that “The highest risk that exists now is fiscal, and if not managed well it will make 2023 growth very bad. We are in a situation in which the fiscal issue must be taken seriously, because that will also end up affecting the external accounts”.
THIS IS THE GROSS DEBT
The latest gross debt report from the Ministry of Finance showed a balance of $745.89 billion, and as a percentage of GDP it stood at 56.6%.
Of that total$458.25 billion corresponds to internal debt (61.4% of the total) and $287.54 billion to external debt (38.6% of the total).
Of the total debt, 62.4% is acquired in local currency (43.8% in pesos and 18.6% in UVT), while 37.6% is in foreign currency (34.2% in dollars and 3 .4% in euros).
LAURA LUCIA BECERRA ELEJALDE
