The Colombian government joined the wave of optimism about the dynamics of the Colombian economy, and updated its projection for the gross domestic product (GDP) for 2022.
The Finance Minister Jose Manuel Restrepoyesterday presented the ‘Medium-term fiscal framework’ (MFMP) for 2022 with the updated macroeconomic assumptions.
(Read: Government presents the 2022 Medium-Term Fiscal Framework).
The first of them: the National GovernmentHe expects GDP to grow 6.5%, instead of 5% as it was foreseen in the Financial Plan that it presented in February. “We did a detailed analysis of the figures, of the ISE, of the way in which the industry is behaving, commerce, we are seeing the collection and the way in which it has been behaving, and based on that analysis we see that that estimate from 5% to 6.5% is realistic”, highlighted the holder of that portfolio.
This figure is above most market forecasts, and even international organizations that also revised their estimate last week, such as the World Bank, at 6.1%, and the Organization for Economic Cooperation and Development (OECD) at 5.4%.
the new accounts
Together with this projection, the Treasury also presented the update of other macroeconomic variables. “The 2022 fiscal framework is the delivery of the roadmap to the next government that will be elected next Sunday”, Restrepo said during the presentation.
This implies that the new government will do its accounts with a barrel of oil at US$100, a dollar at $3,924 and inflation that will close the year at 8.5%.
It is worth mentioning that the financial plan for February had a price of Brent at US$70, a representative market exchange rate (TRM) at $3,823, and inflation was expected at the end of the period at 4.3%, which implies that this forecast was practically doubled.
Precisely, the Minister recognized that although the dynamism of the Colombian economy would lead to an almost total closure of the GDP gap compared to what would have been observed in the absence of the pandemic, inflation continues to be one of the great challenges in the panorama.
Financial plan
The Government also updated the accounts of the financial plan for this year, and highlighted that thanks to the better growth dynamics and the collection figures, it is expected that the fiscal deficit for this 2022 it will no longer be -6.2% but -5.6%, an adjustment of 1.5 percentage points as a proportion of GDP.
“We are seeing an upward revision of $19 billion in the tax collection goal for this year, ergo, tax collection will neither be what we had planned in 2021 of $162 billion, nor what we had planned in the financial plan for this year of $183 billion, but it will be $202 billion”, he assured, and highlighted that as of May it was already $11.8 billion above the planned goal.
Restrepo assured that the reduction of the deficit to 5.6% in 2022 “is achieved in response to the effect of the reactivation measures on collection, and despite the effort to pay the deficit of the Fuel Price Stabilization Fund (Fepc) of the first quarter of this year, equivalent to $14.2 billion.
In relation to the debt figure, the forecast was also revised, and according to the Treasury, the level of Colombia’s public debt for the end of 2022 is expected to be 56.5%, while in the financial plan it was expected to be 60.5% and in the fiscal framework of one year it had been projected at 67%.
“It is a very important message that leaves us very close to the anchor limit of the level of public debt with respect to GDP that we define in the fiscal rule. Colombia in 2022 will be below what we had planned for 2023”, assured the minister.
LAURA LUCIA BECERRA ELEJALDE
