Deadline for approving amounts of the 2025 Budget would be shorter than expected

The debates for the processing and approval of the General Budget of the Nation are one of the priorities of the National Government and the Congress of the Republic, whose spokesmen have been meeting since last week at the Ministry of Finance, to learn the details of these accounts, which still generate many doubts.and determine whether they are viable or whether it is necessary to make a cut to the spending projected by the Casa de Nariño.

Lines such as economic transfers and debt are among the points that attract the most attention from analysts and fiscal authorities in the country, given that there is little room for maneuver and many do not believe that the Dian will be able to collect all the goal that is being set for it in terms of efficiency. All this, despite the fact that Minister Ricardo Bonilla has shown himself to be optimistic about the future.

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The fact that part of the expenses ($24.1 billion) depend on being able to comply with the fiscal rule early and on the approval of a Financing Law also generates concern, since if this is not achieved, the country could once again face a scenario of cash constraints and budget cuts that put the economic dynamics at risk in the coming months.

Strong debate

To all this we must add an alert that arose in recent days, according to the cuaThe Executive and Legislative branches would have less time than expected to approve the total amount of the 2025 Budget, which currently stands at $523 billion, but faces risks of being reduced to $511 billion if there is no consensus between these two branches of public power.

According to the Organic Budget Statute (Decree 111 of 1996), the general amount of the PGN must be approved before September 15. However, Professor Henry Amorocho, an expert in Public Finance at the Universidad del Rosario, indicated that this date falls on a Sunday and that if we add to this the work dynamics in Congress, the time that we actually have is less than a week.

This academic explained to Portafolio that the first phase of the Budget approval process was already completed with the filing of the official project on July 29; at which time it was officially approved. Discussions have begun on how much money Colombia needs for its expenses next year.

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“That day, Minister Bonilla said that the budget was underfunded by $12 billion, which would be closed with a financing law that was said to be coming to Congress in 7 or 15 days, but for which there are no further details yet regarding what will change,” said this teacher.

After this, which is where they are currently, comes what Professor Amorocho called as the support and justification of the accounts projected by the Ministry of Financea, which have a deadline of August 15 to complete the final approval of the general amount.

Henry Amorocho, professor of Public Finance at the University of Rosario.

Courtesy – University of Rosario.

“Here, it is basically decided whether what was filed on July 29 remains in force or whether modifications will be made. Let us not forget that in this regard, the Government has confirmed that there will be no modifications and that it will soon present the financing bill to finance the $12 billion defunding,” he explained.

Government sources and those who are part of this discussion table told Portafolio that one of the warnings that would have been made to the congressmen, from the National Planning Department, is that if they insist on making cuts As for spending, they should go to investment, since there is no room in the other areas.

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Less time

Regarding the time frame of this project, Henry Amorocho said that “this week ends on September 6 and next week it is time to approve what some call the spending goal for 2025. In the face of this, it turns out that the budget regulations say that they have until September 15 at the latest.”

In this sense, he warned that “in Congress the weekly programming basically It is done between Tuesday and Wednesday, which for next week falls on September 10 and 11. So we basically don’t have until the 15th but until September 11 to define the appropriation goal.”

In this way, counting business days, Congress would have only nine business days to vote and decide what will happen with the amount of the Budget. However, if the days in which the Legislature meets are taken as a reference, there would only be six, since there are no citations on the agenda for this week, so far, for Saturday.

Financing risks

This alert was recently added to the one issued by the Corficolombiana economic research team, which in its weekly report said that the adjustment in the investment budget for 2025 is a consequence of the country’s fiscal restrictions and that the reduction in investment in strategic sectors could have negative effects not only on economic recovery, but also on the financing of the government itself, putting the country’s fiscal sustainability at risk.

Economic growth

iStock

“In terms of financing, the Ministry of Finance projects tax revenues of $304.5 billion next year and an additional $12 billion if the Financing Law that is about to be submitted to Congress is approved. Even without taking the latter into account, the goal for next year implies a growth in tax revenues of 17.8% compared to the goal for 2024 of the Medium-Term Fiscal Framework (MFMP),” they noted.

For these experts, “the trend in tax collection this year points in the opposite direction” than expected by the Ministry of Finance, since tax collection in the first seven months of 2024 had an annual drop of 6.8%; “which implies that to meet the MFMP’s tax revenue target it should grow, on average, above 4% annually between August and December. It is unlikely that the government will achieve next year’s revenue target and we anticipate that, in the absence of adjustments to the draft PGN, the country will have difficulties in complying with the fiscal rule next year.”

Meanwhile, the Ministry of Finance is struggling to convince congressmen that the Financing Law is necessary and viable, while the mood in the House and Senate is not the best, as it is feared that this could generate fiscal risks for the country next year.