Cash problems? They warn that the Petro government would be spending more than it has

One of the alerts in recent days in economic matters for the country has to do with the low level of cash that is hitting the State’s finances, which, although it has not been recognized by the Government, for now is explained in the drop in income for the country, especially regarding taxes and the blows dealt to the tax reform.

The first thing to say is that this, looked at technically, is known as the National Treasury Deposits (DTN), which the Government has in the Bank of the Republic, and which are almost five times lower than a year ago. . This, put simply, It is the money that the country has to cover its expenses, without resorting to debt.

That said, a report from the Bank of Bogotá highlights that in this indicator, at the beginning of April it fell to a minimum of $4.1 trillion, when at this time the balance was located at $25.9 for the median between 2002 and 2022. The result for 2024 is much lower than that of 2023, when the Government had $14.8 billion.

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“The start of the year for public finances does not has been the most encouraging. In addition to the update of the Financial Plan that brought about the suspension of the fiscal deficit adjustment path that began in 2021, tax revenues have been below the Government’s goal, with both events accentuating fears of non-compliance with the Rule Fiscal in 2024,” says the analysis.

This has been one of the reasons why the Minister of Finance, Ricardo Bonilla, has been promoting for several weeks a project to raise the debt ceiling and give the country room for maneuver in the coming years. Although this measure is valid for analysts, there is one point that must be worked on and that is the reduction of spending.

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In its report on the cash status of the National Government, the Bank of Bogotá adds another aspect to what has been happening with the management of the General Budget of the Nation and the income that was projected together with the Dian. It is about the constant increase in public spending that only deepens the problem already mentioned.

To support this idea, they begin by saying that although it has already been said that budget execution is at the lowest levels since 2016 (the year since which monthly figures have been available), reaching just 27.3% in April, only in commitments , data that is lower in obligations and payments, everything changes when you look at the nominal figures.

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“In nominal terms, government spending has increased notably as a consequence 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 and investment expenses grew 22% annually so far from the year to March,” they explained.

In this sense, they explain that “if the execution were historical, spending would have grown almost 40% annually. However, in the same period, tax collection increased by just 4%”, which leaves the country in a scenario in which “a level of spending increasing more than income does, has translated into lower cash for the Government, which The deposits of the National Treasury Directorate (DTN) in the Bank of the Republic have become evident.”

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“The Government has chosen to accelerate its pace of issuance of internal public debt, which, according to the Financial Plan, is budgeted at $53.4 billion in 2024. According to calculations, the balance of TES increased from ending 2023 at $497.9 billion to reach $503.7 billion at the end of March, that is, an increase of $17.8 billion,” says this report.

In this way, they conclude by saying that cash problems pwould hate continue to pressure the implementation of this early redemption strategy, with an accelerated issuance of TES, which would end up ending the auction scheme early, which could be interpreted as good news, but would open space for early financing and ultimately greater issuance of TES by less transparent mechanisms.