Until Friday, September 13, The Congress of the Republic has a deadline to approve the amount of the General Budget of the Nation (PGN) for 2025, which will be the basis for discussing the project, which will have to be definitively approved before October 20. The Government’s proposal is a PGN of 523 billion pesos, of which 12 billion would come through a financing law.
However, several congressmen, including Efrain Cepeda, the president of Congress, They have publicly asked the Government to lower the amount to 511 billion pesos or they will not accept the 523 billion pesos. Given this, What was President Gustavo Petro’s response? Open the possibility of issue the PGN by decree.
He announced this on the evening of Monday, September 9, with a message on his account on the social network X (formerly Twitter).
(See: ‘We have enough votes to defeat tax reform’: Congress president).
“There is a paradox. Most of the economic commissions will not approve the Budget law because they do not want the financing law. The financing law does not increase taxes for individuals, except for the ‘super-rich’, and it lowers income tax for all companies in Colombia, except for fossil fuel extractive companies. Why do they not want to lower income tax for all companies in Colombia? It seems that the Budget, as the Constitution and the law say, will be issued by decree.“, Petro said.
There is a paradox formed today.
Most economic commissions will not approve the budget law because they do not want the financing law
The financing law does not increase taxes for individuals, except for the super-rich, and it lowers their taxes…
— Gustavo Petro (@petrogustavo) September 10, 2024
The lack of agreements for the 2025 PGN
The Government submitted its 2025 Budget project for a value of 523 billion pesos, as already stated. However, The figures do not fully convince Congress and there are some proposals to protect the country’s fiscal stability.
(See: How much has the Colombian economy grown in the last 6 presidential terms?).
In a conversation with Portafolio, Senator Cepeda had already explained that he proposed to the Ministry of Finance to separate the financing law from the PGN and process a tax reform in 2025.
“It is a proposal signed by a plural number of congressmen that goes in that direction, because I believe that it is not responsible to the country, nor is it responsible to the Congress of the Republic, to approve a tax reform blindly (…) A tax reform is a matter of great responsibility for us and to include 12 billion pesos there without knowing what will be approved or what will not be approved when it is presented. I have said that the responsible thing is that we discuss the general budget of the Nation 2025 without those 12 billion pesos, then we discuss the tax reform separately and what comes out of there is done in an additional budget, as was done with the previous tax reform.“, the congressman explained.
In addition, there is already a proposal signed by 30 congressmen to reduce the budget by 12 billion pesos and it remains at 511 billion pesos.
As a result of this, Petro put on the table the issuance of the PGN for 2025 by decree.
(See: Colombian investment abroad soars by 80%).
The newspaper EL TIEMPO, for its part, reported that “While it is true that it is a figure contemplated by the Constitution, there are no recent precedents of administrations that have applied it. The reason is that the legislative route gives greater legitimacy to the Budget and allows congressmen to make changes and modifications. On the other hand, by decree it is a unilateral process from the Executive.“.
Budget.
Positions on the PGN
At the beginning of September, Bruce Mac Master, president of the National Association of Industrialists (Andi), He spoke about the Budget and financing law, noting that the proposal could increase unemployment by 0.38 percentage points (pps) and decrease the investment rate by almost 2%.
“At this time we have no doubt that the best tax reform is greater economic growth and reduced spending. This is the largest generator of resources for the State. As this reform is in place, it would have effects on unemployment, informality and economic activity.“, said Mac Master.
(See: Colombia’s GDP for the second quarter of 2024 grew by 2.1%).
Regarding the 12 billion pesos with which the PGN would be completed, he assured that this This would only be possible if there is greater economic growth, supported by physical security, energy security and legal security.
PORTFOLIO
