One of the issues that has been most popular on the local economic agenda in recent days is the low cash levels faced by the National Government, among other things, due to the drop in income that is being generated by the economic slowdown and the loss of several sources of resources that the Minhacienda projected and that fell in the courts.
One of the first study centers to issue this alert was Investigaciones Bancolombia, whose experts highlighted that data from the Bank of the Republic show that the availability of the Ministry of Finance is currently at an average of 0.8% of GDP, the lowest level since 2004 for comparable periods (January – April).
Ricardo Bonilla, Minister of Finance and Public Credit
Presidency
“In the most recent month, this trend worsened and reached a minimum of 0.5% of GDP, consistent with an average balance of $8.54 trillion. In light of the availability in the Government account in April, this amount turns out to be the lowest in the last two decades. Since 2004, governments usually maintained cash equivalent to 1.9% of GDP in the corresponding periods,” the report says.
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To explain it simply, this indicator is equivalent to the money that the country has in its savings account to spend without going into debt. That said, it should be noted that the amount already mentioned leaves this indicator at its lowest level in the last 20 years, which is not a minor figure.
Ministry of Finance and Public Credit.
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In addition to this, the Bank of Bogotá reported in recent days that while State collection and income is in free fall, operating expenses are growing significantly, aggravating the financial crisis for the country.
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“In nominal terms, Government spending has increased significantly as a result of the high appropriation of resources. In particular, given that the PGN went from $423 billion in 2023 to $502 billion this year, the payments made by the Government for operating expenses and investment grew 22% annually so far this year to March” they explained.
Bank of the Republic.
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Taking this into account and that it is no secret to anyone that the challenges will continue in the medium and long term, Portafolio consulted several analysts about the possibility that the country will fall into a scenario where the lack of resources will lead it to fail. be able to meet obligations such as the payroll of your employees or the payment of suppliers.
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The first of these was José Manuel Restrepo, rector of the EIA Universitywho highlights the drastic drop in the Government’s liquidity and the excessive increase in public spending, suggesting that if urgent measures are not taken to freeze spending and reactivate the economy, there could be non-payment problems.
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“Some of this is happening in part in the health sector, when some EPS are in difficulties because there are delays on the part of the Government to make the transfers and that is generating a cash problem for them and recently they even raised their hands asking for more resources because their assets or more agility in payments were being affected,” he explained.
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A spending freeze is perhaps the short-term solution most insisted on by the experts who spoke with this medium, as was the case of the professor of Public Finance at the University of Rosario, Henry Amorocho, who indicated that You can start with the expenses that you considered “unnecessary”.
Indicators
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“We must look for prompt solutions, which undoubtedly have to be linked to postponement of expenses, especially operating expenses and of course postpone to some extent other types of expenses and reduce some that have been realized that are not competitive in what It concerns execution,” Amorocho said.
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While there is a risk of default, these analysts suggest that it is not It is immediate, but the operation and execution must be carefully reviewed by the Treasury authorities or else it could materialize and affect, among other things, the risk rating and investor confidence.
Diane
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For Jorge Restrepo, professor at the Javeriana University, we must not overlook that the Government has access to other sources of financing beyond deposits in the Bank of the Republic, such as resources in the financial sector and debt issuance, adding The months of heavy tax collection are coming.
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“We are in the middle of the period for filing income tax returns for this year by companies and many individuals are beginning to file their own income and complementary tax returns to the Dian, which also generates an important flow of resources for the Nation. In fact when “You see the projections, you find that that is where there is an impulse that must be taken advantage of,” he indicated.
Taxes.
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Finally, the former Minister of Finance Juan Camilo Restrepo pointed out that beyond the fact that at this moment the country is going to receive a not inconsiderable amount of resources, which can help it level the treasury, it is imperative that spending be reviewed and as soon as possible a tightening of the belt.
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“The debt level is dead. The underlying solution is to moderate the pace of expenses that comes very quickly, but if they do not do so, they have to go into debt even at higher costs, because otherwise they would be committing expenses without any budgetary and liquidity support,” said this expert. .
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In all of this, it is also worth saying that the Ministry of Finance is currently promoting a bill in the Congress of the Republic to raise the debt ceiling by US$17.6 billion, which, although it will not be used in its entirety right now, will It will allow the country to better manage its debts and give its finances a break.
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