PGE 2025 rises 1.1% for autonomous entities; They see makeup in the face of the increase in the crisis

The legislators went on recess until January 1, 2025, without approving the General State Budget (PGE), so it is imminent for the Executive to put it into effect as of the first day of the year. The Consolidated Budget is Bs 296,566 million (1.14% more than in 2024), of which 39,194 million are distributed among the autonomous territorial entities (ETAs), that is, departmental governments, municipal governments, autonomous indigenous peasants, universities and a regional autonomous government.

Subnational governments, mayors and governorates, have observed that revenues from the Direct Tax on Hydrocarbons (IDH) decreased and co-participation resources increased, but they consider that it is a “make-up” in the face of the increase in the economic crisis.

From the Ministry of Economy and Public Finance (MEFP) they indicated to EL DEBER that one of the main incomes for subnational governments, the HDI, has decreased in recent years and for the next it will suffer a reduction of 15.4%, “due to to the lack of investments in hydrocarbon exploration to replenish hydrocarbon reserves.”

The second most important source of income, tax sharing (taxes), has increased by 17.8% compared to the 2024 budget, “which demonstrates the effort of the National Government in terms of collections and in this way alleviates the decrease in resources. in other sectors,” highlighted the MEFP.

The entity highlighted that collection through National Taxes has a greater participation with a positive variation of 7.6% compared to the 2024 administration, followed by the collection of Municipal Taxes with an increase of 12% and finally departmental taxes with 4 .7%.

Miguel Antonio Sorich, Secretary of Finance of the Government of Santa Cruz, stated that “we are concerned about the optimism of the assumptions on which the PGE 2025 is based, since it considers a growth rate of the Gross Domestic Product (GDP) of 3.51 %, when there are serious indications that these levels will not be reached (…). It also assumes an inflation rate of 7.5%; while, according to the National Institute of Statistics (INE), as of October 2024, a cumulative variation reached 8.82% (…)”.

According to Sorich, the fiscal deficit of 11 consecutive years is also worrying and is expected to be -9.2% by 2025. The volume of current spending (58.8%) is also alarming, but one of the biggest risks is that tax and customs revenues grow by 7.6%; “which means greater tax pressure on companies and citizens, in times of crisis; which could exacerbate informality and social discontent.”

The secretary maintained that Bs 840 million of resources were obtained that have been managed by the executive during the 2024 administration, however, the PGE 2025 this amount entails a reduction of Bs 63 million. “This reduction mainly affects the capacity of the government to execute programs, investment projects and sources of employment within the institution that boost regional demand and production, key in a department that is the economic engine of the country,” he noted.

For her part, Sandra Flores, Director of Finance of the Government of Cochabamba, highlighted that the participation of the governorates is reduced to 2.5%, in the PGE 2025, to address 36 exclusive powers, 7 shared, 16 concurrent and many others. responsibilities that are assigned with the Financial Law and specific regulations, threatening the economic sustainability of the Government.

“The ceilings that the central level provides us are not real, since the transfers are not made effective, causing serious liquidity problems when meeting the goals programmed in the POA and its consequent effect on society. This year, with data as of November, there is a deficit of Bs 82 million with respect to the programmed ceiling in the sources of oil royalties, IDH, IEHD and the Departmental Compensation Fund, generating a financial crisis,” said Flores.

The executive noted that there are many responsibilities at the central level that are assumed as mandatory expenses by the GADC, the largest being those related to the health sector. “Although the Framework Law of Autonomies expressly states that it is the responsibility of the central level to define the salary policy, manage the resources and finance the salaries and benefits of the personnel dependent on the Unified Health System, we are obliged to cover the cost of health personnel (Bs 26.9 million), the vaccination bonus (Bs 7.1 million), but the requirement for this concept is close to Bs 15 million and refreshments for health personnel (Bs3.4 million) he detailed.

From the Secretariat of Administration and Finance of the Municipal Government of Santa Cruz de la Sierra, they stated that by 2025 there is a reduction of Bs 37,159,561 in HDI resources and an increase in Tax Co-Participation resources, according to data from the 2024 Census. However, the sum is not enough and there will be financial difficulties in the Universal Health Service (SUS) due to the few resources allocated in the financing source.

“This means that health care would not be guaranteed in the different hospitals and health networks, since there will not be enough medicines, supplies, reagents and medical equipment. With the resources assigned by Tax Co-participation through the Central Government, they are also intended to cover expenses in hiring Temporary Personnel and Health Items from the different 1st level health establishments. And 2nd. Level which allows guaranteeing uninterrupted operation during the management”, reported from the Gamsc.

Meanwhile, Juan José Ayaviri, director of Press and Corporate Image of the Municipal Government of Cochabamba, stressed that the sector most affected by the economic contraction will be Health, secondly Education, then Environment and Waste Management and Citizen Security.

“The central government has demarcated these powers with insufficient or no allocation of resources. According to data from various reports, on average, financing for these areas represents less than 40% of the real execution cost, leaving the municipalities to cover the deficit with their own resources,” he stated.

At the same time, he regretted that this situation has forced municipal governments to divert resources from strategic areas such as urban infrastructure and economic development, to cover competencies that should be supported by the central level. “This not only affects the response capacity of the mayors, but also generates a fiscal imbalance that impacts the quality of life of citizens.

For economist Fernando Romero, the great impact for subnational governments is that 84% of the PGE 2025 will be administered and spent by the central government, leaving a limited financial waistline for the rest of the subnational public entities, that is, departmental governments (3%). , municipal governments (5%) and universities (2%), which are gradually becoming operating entities with little public investment.

“Universities, despite their autonomy, will still have a very complicated 2025 in financial terms, since all subnational entities will have less income from oil rents (royalties and HDI), said Romero.

For his part, the Public Budget analyst of the Jubilee Foundation, René Martínez, considered that the increase in income from tax sharing (1.1%) is “nominal”, considering that the projected inflation will be 7.5%. . “When inflation increases, collections in nominal value increase, because commerce increases its prices,” he explained.