Like every year, the ministry of The Treasury updated its economic projections, and yesterday the Medium-Term Fiscal Framework for 2023 was presentedin which the Government raised its projection of growth, but also that of the fiscal deficit.
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This since the country would be doing its accounts with a dollar at $4,640 and not at $4,758, as expected in the Financial plan that was presented at the end of last year, and with a barrel of oil at a lower price, which is no longer estimated at US$94.2 but at US$78.6.
With this panorama, the expectation that the Government has is that the economy will grow 1.8% this year, not 1.3% as estimated six months agoand that the fiscal imbalance will reach -4.3% as a percentage of GDP.
“The economic forecast said that we could have finished at 3.8%, but the behavior of oil prices, the reduction in imports, and therefore the collection, make us highly responsible for saying that 3.8% is impossible. to fulfill. And that means revising the fiscal deficit upwards”he explained.
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However, Bonilla highlighted that compared to the data for 2022 (-5.3%), a reduction of 100 basis points in the fiscal deficit is also expected of this year.
“This adjustment would be consistent with the achievement of a primary balance for the first time since 2019, leveraged on the higher tax collection of the reform and the situation of high oil prices: the total income of the National Central Government would reach a historical maximum as a percentage of GDP”indicates the Fiscal Framework document.
According to the minister, it would be possible to simultaneously reduce the fiscal deficit, but also a historic increase in primary spending, in line with the objective of achieving greater social justice, in compliance with the fiscal rule.
But for 2024 the estimates point to a higher figure, an increase that would reach 4.5% of GDP. This is due to the commitments with the interests in the payment of the debt that must be settled next year. Bonilla assured that “The country is not going to declare itself in moratorium or have a default, which does not mean that other financing possibilities will not be sought”said the minister, mentioning proposals for new issues such as green bonds and social bonds.
Another government projection is that “net debt would converge to the 55% of GDP anchor” and by 2023 it will be 5.8%, although in 2024 an increase to 57.1% is estimated.
It is worth noting that the Fiscal Framework also estimates an increase in oil production, which would be 769,000 barrels per daycompared to the 743.00 foreseen in the Plan.
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Likewise, it is projected that inflation would end the year at 9.2%, above the 7.2% estimated months ago, and that the current account balance would register a deficit of 4%, and not a figure of -3.7 % as provided for in the Financial Plan. budget addition
Yesterday, the budget addition for this year, for $16.9 trillion, was tested in Congress. Spending priorities are in the education, health, housing and transportation sectors.
“There are the complementary resources to the budget, to carry out activities in civil works, housing, and strengthen programs in the agricultural sector, among other things”highlighted Minister Bonilla.
LAURA LUCIA BECERRA ELEJALDE
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