There is just over a week left for the Ministry of Finance to present the draft General Budget of the Nation for 2025 and while within this entity they are working at full speed to meet the established deadlines, the accounts that are made within the Government would leave So far, investment has been the biggest sacrifice in the projected expenses.
Sources consulted by Portafolio maintain that throughout the various meetings that have been held, both in the Ministry, as well as in National Planning and Casa de Nariño; it would be projected to allocate around $47 billion for investment expenses for next year, which would leave this sector of the economy at its lowest point in the last five years, after the $43.4 billion that there was in 2020.
Ministry of Finance – Ricardo Bonilla.
Courtesy – Ministry of Finance
Likewise, the data that has been released so far shows that the investment cuts would mainly affect the infrastructure sectors, especially 4G roads, as well as education and health. All this while President Gustavo Petro’s order is to go out and find the money needed to improve this part of public spending, which would be done through the already announced financing law.
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But One of the most striking facts is thatif the projections of the draft Budget, presented in April to Congress and which point to an appropriation of resources of $524.4 billion for 2025, are taken into account, the investment amount would be the lowest since 2000, since it would barely represent 9% of the total, remaining below the 20% that this item represented in this year’s accounts.
If we take into account the projections of the draft budget, presented in April to Congress and which point to an appropriation of resources of $524.4 billion by 2025, the investment amount would be the lowest since 2000, since it would barely reach 9% of the total equivalence, falling below the 20% that this item represented in this year’s accounts.
General Budget of the Nation.
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It is worth noting that the first draft of the budget stated that investment next year would be $69.7 billion, which also marked a drop of more than $30 billion compared to current appropriations. The spending squeeze and the possibility that the slowdown will continue to affect the State’s coffers are two factors that significantly influenced this decision.
The Congress that the National Government will meet with the new legislature
Squeeze for validity
Although preliminary figures, confirmed by three sources from different entities of the Government, sow clouds over investment in Colombia for 2025, this panorama is complicated when comparing these data with the future periods that the Government must include in its spending, whose fiscal burden amounts to $21.1 billion, according to calculations recently presented by Corficolombiana.
Digital investment
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“For the two remaining years of the government (2025-2026), $46.8 billion pesos have been allocated for this concept, of which $37.2 billion (bn) are for investment expenses ($21.1 billion in 2025 and $16.1 billion in 2026) and the remaining 9.6 billion of the terms go to operating items,” they explained in a report.
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Thus, discounting this amount of rigid spending, the Government would only be able to decide on $26 billion, thus leaving it with very limited room for maneuver. It should not be forgotten that future terms are debt commitments already established, which must be respected so as not to jeopardize the country’s macroeconomic stability.
Investment in Colombia.
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One of the things that has been reviewed very carefully within the team in charge of the Budget is the balance of the commitments of future validity for 2025 and the very strong fiscal pressure that it is generating on the General Budget of the Nation due to the inflexibility that they represent for the National Government.
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Just to give an example, of the established investment expenditure For this year, which was $99.8 billion, only $17.6 billion were future amounts, which is equivalent to just 18% of the total resources. On the other hand, looking at what is coming for 2025, in the best case this equivalence would not be below 40% and in the scenario left by the figures known by Portafolio, it is seen that the country will barely be able to decide on 44%.
The outlook is for global GDP to gradually increase by an average of 2.7% between 2025 and 2026.
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Lower operating costs
The ‘cut’ in spending is an inevitable reality in the face of a better flow of tax revenues and proof of this is that the Ministry of Finance has already made a first cut of $20 billion which, although there are doubts about the possibility of achieving more than 40% of this amount, was a decision celebrated by analysts and study centers.
Now, as regards the areas where cuts should be made, there are voices that point out that we should look more towards the areas of operation and not the areas of investment, since the latter are the ones that ultimately contribute to development and economic growth of the country, turning into works and projects that generate employment.
The World Bank has lowered the Colombian economy’s performance by 0.5% for this year.
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For José Manuel Restrepo, rector of the EIA University, it cannot be overlooked that “the current level of government spending, in relation to GDP, is as high as in a pandemic year and has been growing significantly. This level of spending is not necessary in a normal year.”
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And it is that when looking at the records of the Ministry of Finance Regarding budget executions and appropriations over the last 20 years, it can be seen that between 2022 and 2024, the money allocated to operating expenses rose by almost $100 billion, going from $211.3 billion two years ago to $308.8 billion today, a situation that for many is unjustified and may be a starting point for reducing spending.
Narino Palace.
TIME
For now, the Government is still working on the final preparation of the General Budget of the Nation for 2025, since although they already have the viability and review by National Planning, some adjustments are needed that they hope to have ready this week, for the final review by the President and to be able to take it to Congress on Monday, July 29.
Portafolio consulted the Ministry of Finance about the projected value for the 2025 investment and,At the time of going to press, it was not possible to obtain an official response from the entity.
