Budget addition: the dilemma between spending and lowering the deficit

For this year the National Government cIt will have around $22 billion more for the budget, an addition that it has been working on and will make official in the coming days, and that it will have around $20 billion from the tax reform and around $2 billion left by the Banco de la República last year, or greater tax collection, among other sources.

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However, it is not yet fully known what all the resources will be used for.
Official government sources told Portafolio that would allocate to a large extent programs such as the fight against hunger, the youth initiative for peace, for tertiary roads and investments associated with agrarian reform, among other items that continue to be considered. But for some experts, the Executive should also leave a game to level the commitments in fiscal matters.

The Minister of Finance, José Antonio Ocampo, confirmed last week that the project of budget addition must be delivered to Congress on February 6, and that in the Council of Ministers the budget items in which the resources will be invested would be defined. He also said that the components of that addition may be released this week.

“The objective is to agree among all what the priorities are, to what can be assigned that $20 billion or $22 billion available to add within the fiscal deficit reduction goals. There are two exercises that have been carried out, one by the Ministry of Finance, and the other by the Presidency of the Republic, to see how we can satisfy this addition.”, Ocampo explained in recent days.

With the $22 trillion, several commitments have been contemplatedsuch as the $800,000 million with which the Government promised to cover the resources that the concessions due to the freezing of toll rates will stop receiving in 2023, a measure announced by the Government to avoid inflationary pressures.

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Within the program to fight hunger, led by the National Planning Department, a subsidy of $500,000 has been proposed for mothers who are heads of households in households in poverty, a similar amount for older adults who do not have a pension, and without counting the promise of a salary of $1,000,000 to 10,000 peace managers.

In addition, Ocampo confirmed that resources will not be used to pay off the debt, but mostly as an investment budget. “The budget addition will also include interest payments, but that goes outside, because the fiscal rule forces us to adjust what is called the primary balance, that is, before interest payments, but that is refinanced in some way”, he explained.

“The budget addition is of vital importance and is one of the Government’s priorities. The fundamental thing is to see how this additional resource is going to be distributed, and how the allocation will be by sectors”, mentioned Anwar Rodríguez, vice president of Anif.

The economist pointed out that there are needs in areas such as health and that there has been talk of the purchase of land“but without a doubt it is important that not all the additional income goes to pure spending, but that some percentage goes to strengthen the fiscal stabilization process.”

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According to Rodríguez, forward “there is no greater certainty of what the tax revenues from the mining-energy activity will mean”. Among Anif’s recommendations is to invest part of the resources for the deficit of the Fuel Price Stabilization Fund (FEPC).

On the other hand, Oliver Pardo, director of the Fiscal Observatory of the U. Javeriana, pointed out that according to the Financial Plan delivered at the end of last year should add almost $20 billion that would contribute the taxand between $2 billion and $4 billion as a result of the best collection performance.

“Only $16 billion was going to be allocated to social programs, and the rest to two things: additional resources for the Fuel Price Stabilization Fund and higher interest payments due to the global rise in debt.”indicated.

The former Minister of Finance, Mauricio Cárdenas, also commented that at this moment “great prudence is necessary”, because although there is a good amount of fiscal resources as a result of high prices of oil, coal, and taxes, “the photo does not necessarily correspond to to the film of the next years”.

For Cárdenas, “accounts cannot be made on the basis that current income is permanent,” and one should be “austere” because the situation can changer. “A budget addition should be less than the resources that are allowed today. A reform that uses between 50% and 70% of the additional resources would be sensible, but using all of it would not,” he said.

Cárdenas assured that taking advantage of this surplus to lower the deficit accelerates the transition to investment grade. “We gain a lot by reducing the fiscal deficit,” he said.

LAURA LUCIA BECERRA ELEJALDE
Journalist Portfolio