The Autonomous Committee of the Fiscal Rule considers that the Colombian government, wrongly, is counting on US$ 2,558 million of which it is not certain whether they will be paid within the expected period.
The Autonomous Committee of the Fiscal Rule (CARF) is an organization of the Colombian State that ensures that the Executive does not exceed its expenses, considerably increase its debt, comply with its financial obligations and have room for maneuver in the event of any eventuality.
Hence, any warning about a possible non-compliance with the fiscal rule (the limits established so that the country's finances are on the right path) is relevant.
In its most recent report, CARF reported that in 2024 Gustavo Petro's government would break the fiscal rule by including unsustainable income in its calculations.
This is $10 billion (US$ 2,558 million) that, according to the Colombian Ministry of Finance, is expected to be received from litigation arbitrations.
For the CARF, such income is not structural, since it is derived from the decumulation of a contingent asset. In other words, it is a single payment money and it is not completely certain that it will be paid within the expected period.
“Given that the Fiscal Rule requires excluding these resources, the structural net primary deficit rises to 0.8% of GDP, which would not comply with the Fiscal Rule,” the document reads.
That is, if it wants to meet the minimum income thresholds for this year, the Petro government will have to look for other sources (that are permanent) to guarantee those $10 billion (US$ 2,558 million) that it included in its accounts.
The Committee also highlighted that Colombia completed four years financing fiscal deficits of more than 4% of GDP (as is the case of the gaps present in the Fund for the Stabilization of Fuel Prices -FEPC-, which have been mitigated by account of the gasoline price adjustment based on the international reference). In the 2024 Financial Plan, a deficit of 5.3% of GDP is programmed.
“In this scenario, debt service costs represent more than 4% of GDP and consume 25% of tax revenues. This interest scenario shows the pressure exerted on public finances by the level of debt that the nation has, and also by the risk perception of financiers who demand high interest rates for Colombian debt,” the report reads.
In light of this position, the Committee also warns that space is being reduced for a fiscal policy that allows the government to respond to unexpected shocks, thus limiting its room for maneuver in the future.
To help reduce deficits, and provide resources to the nation in the event of eventual contingencies, the Committee recalled the importance of adjusting the regulated price of the ACPM, since the pressure on the FEPC continues.
With the adjustment to the price of gasoline, the deficit has been reduced from $36 billion (US$ 9,211 million) in 2022 to $20.5 billion in 2023 (US$ 5,245 million), which would be the balance to be reached in the event of an eventual increase in the price of ACPM.
“The fiscal pressure in 2024 continues to be attributable to a growth in primary spending without FEPC that was programmed in the Medium-Term Fiscal Framework and in the General Budget of the Nation, and continues to be programmed above the growth of income,” he says. the committee.
According to the Committee's estimates, Colombia's debt could reach 57% of GDP by the end of 2024, which would imply an increase if one takes into account that last year it closed at 55%.
