Businessmen joined the debate that has already begun in the country over the draft General Budget of the Nation for next year, which was presented to the Congress of the Republic and is expected to begin to be discussed in the coming days, warning that there are several warning points that must be reviewed to prevent the country from heading towards a recession.
In a recent message posted on his social media, Bruce Mac Master – president of Andi and the Trade Council – indicated that before thinking about an increase in operating expenses and making revenue projections, one must be aware that the country is in times of slowdown, which require responsibility and caution before making any decision.
Inflation in Colombia could soon resume its downward path despite the pressures
“Although you may not believe it, the definition of the General Budget of the Nation affects us all. The National Government has presented its bill for the year 2025, which amounts to $523 billion. This year we will barely be able to pay it and we probably won’t pay it, it was $503 billion. I say this because the tax collection It has not been enough and has not allowed us to pay it,” he began by saying.
Bruce Mac Master, CGN president.
Courtesy – CGN
In this way, Mac Master addresses his first concern regarding tax collection, which he has made clear this year does not have enough strength to guarantee that all the money expected to be spent by Casa de Nariño can be obtained, which once again puts on the table the possibility of increasing the fiscal deficit.
“What we have been recording is an increase from 2022 to 2023 of 19.88% percent and from 2023 to 2024, 19.19%. That is, compound growth in these two years has been almost 4%, in nominal terms, of course. This is especially striking at the same time that we have an economy that is not growing at the speeds that we are all expecting or that it should have,” he said.
How much does politics affect the economy in Colombia, according to Fedesarrollo?
The spokesman for businessmen and industrialists said the economy grew by only 0.6% last year and is expected to grow by just over 1% this year, which contrasts with the rapid increase in public spending, suggesting a mismatch between tax revenues and government spending.
Believe it or not, the definition of the nation’s general budget affects us all. It is there that it is decided whether households and companies should pay more taxes. The Colombian economy is not in a position to make wrong decisions on this front. We can be… pic.twitter.com/LNfreuAuoS
—Bruce MacMaster (@BruceMacMaster) August 5, 2024
“After the tax reform of 2021, the tax reform of 2022, the largest in the history of Colombia, one can be sure that neither Colombian households, nor entrepreneurs, nor SMEs, nor companies have a way to transfer more resources to the State to spend, invest or even make some important expenses in terms of social investment,” he stressed.
Thus, from Andi, the businessmen sent a message to President Petro and the Ministry of Finance, to whom they made it clear that “they will have to adjust to the resources they have,” since the stick is not for spoons and the fiscal situation demands austerity and not falling into unnecessary expenses.
Colombian pesos
iStock
“The only possible tax reform or the only possible tax policy at this time is to cut spending. The State must accept that the size of the economy is what it is today, that the capacities of the economy are the limited ones that we have and that it must adjust to this. The State cannot simply be deciding what it is going to spend, how much … “If households, citizens and companies simply want to withdraw their money,” said Mac Master.
In this regard, he recalled that the National Government’s spending as a percentage of GDP has increased significantly, from 23% in 2018 to 29.7% in 2024, which raises questions about whether Colombia has the capacity to sustain this level of spending.
These are the factors that explain the rise in fuel prices
“This is a serious discussion that affects us all and on which the future of our country will depend. If we make a wrong decision in terms of budget and taxes, we will probably be leading Colombia down the path or onto the path of recession. Be very careful,” he concluded.
The draft General Budget of the Nation is in the study stage by congressmen and its discussions are expected to begin firm over the next few weeks, already predicting that they will be hot.
