The Ministry of Finance, led by José Manuel Restrepo, presented the Financial Plan for 2022, with an update of its projections of the fiscal scenario for this year, as well as the preliminary results for 2021. According to the minister, “The level of GDP that was reached in 2021 already represents a very important base for the current year”and this dynamic, as well as the good result of the 2021 collection, which would also be transferred to 2022, support the new figures.
(Government raised economic growth forecast to 5% by 2022).
Among the updates made by Restrepo is the level of the fiscal deficit. The Fiscal Framework created last year expected a deficit of 7% by 2022, and the new forecast is now estimated at 6.2% of GDP, which represents an improvement of 0.8 percentage points. Likewise, in the primary balance, the forecast improved from -3.5% to -2.6%.
“It is important to note that there is an improvement with respect to the Fiscal Framework in the primary balance of about $8 trillion, which shows a gradual adjustment and an important effort and in the direction of our superior purpose, which is an adjustment in the public finances of our country. country”, Restrepo said.
This lower deficit has to do in part with a better forecast regarding the expected net tax collection for 2022, which according to the minister will reach a level of $183 billion, $13.3 billion more compared to the $169.7 billion forecast in the MFMP, which represents a growth of 13% of the net collection.
This, according to Restrepo, “It has to do with the fact that the Social Investment Law contemplates new instruments in the fight against evasion and smuggling, such as compulsive invoicing, rent invoicing, apart from other efforts, especially the growth and widespread use of electronic invoicing, and also fruit of the modernization of the Dian, and in general of its management in tax collection”.
(Duque’s criticism of the ‘sharp’ rise in rates made by Banrep).
In addition to this, the Minister mentioned that there are between $7 billion and $10 billion that were planned as transitory but are now permanent, and that this implies a better performance from the fiscal point of view.
On the public debt side, the outlook is also favourable. “If in the MFMP we planned to go to the markets to collect $102 billion in financing, we will no longer go for that amount, now in this particular case of 2022 we will go for $75.9 billion. That means a 26% drop in less debt financing needs by 2022. That shows that fiscal efforts and growth also pay off on debt,” indicated the Minister.
In this way, the expectation for this year is that the level of debt will stabilize at 62.7%, very positive news in fiscal matters, if one takes into account that in the June 2021 MFMP it was expected that the reduction in the debt level would begin to occur in 2024, to stabilize it at 62.8% by 2032.
“With what happened in 2021 and we see for 2022, we achieve that gradual and orderly adjustment of public finances is being achieved more quickly, the gross debt will not have to wait for 2024 to fall, but it began to occur last year and the downward path will continue. In 2022 it will reach the order of 62.7%”, assured Restrepo, who celebrated that this result would be taking place a decade earlier than expected.
“They are not only important adjustments but also very positive for the Colombian economy”indicated the minister.
Likewise, among the updates in the forecasts that the minister delivered is an update in the GDP for 2022, which had been estimated at 4.3% and is now expected to grow 5%.
Within the Financial Plan, some of the forecasts were updated compared to those in last year’s MFMP. Thus, the Government will do its accounts in 2022 with a price of Brent oil at US$70 and it is not US$63 as it was until now; A higher average exchange rate is also estimated, at $3,823, when the TRM of the fiscal framework forecast $3,744.
LAURA LUCIA BECERRA ELEJALDE
