Gross debt of the Nation, at 54.6% of GDP as of May

He The Ministry of Finance, through its Public Credit Department, disclosed the latest figures for the gross debt of the National Central Government (GNC). And according to the report, as of May 31, the debt level stood at 54.6% as a proportion of the Gross Domestic Product (GDP).

(See: Debt restructuring needed for many nations: Stiglitz).

In the 2023 Medium-Term Fiscal Framework, presented a few weeks ago by the Government, the technical team of the ministry projected for this year that the GNC debt “cThe downward path will continue to 59.5% of GDP for gross debt and 55.8% of GDP for net debt, which implies a decrease of 1.7 percentage points and 2.1 percentage points of GDP compared to 2022, respectively”.

Thus, the figure for May would already be below the goal of the Treasury for this year. However, as experts explain, This does not mean that the Government’s objective has already been exceeded, and on the contrary, it has several readings and implications.

As explainedJeisson Andrés Balaguera, financial analyst and executive director of the firm Values ​​AAA, Debt in Colombia has a significant correlation with growth, since debt is expressed as a proportion of GDP.

(See: This is how the country with the lowest public debt in the world is financed).

Just as in 2022 and 2021 there was a significant expansion of GDP, linked to low rates, which could help to correct the deficit, for this year, explains Balaguera, growth will be lower, and given that the Banco de la República it has been increasing its rates as it grows less it will make it more difficult to pay the Nation’s debt.

“Indeed, the gross debt is around 54% in May, but for this year it is estimated at 59%, because growth will not be as good as it was two years ago, and although it may be less, it will be a more real rate. What is coming is a decrease that will directly impact the debt and probably that 59% will be explained by the lower growth, because only as the GDP increases, if the debt is maintained, that makes it decrease in proportion”, explained the expert.

In accordance with latest gross debt figuresAt the end of May, the Nation had commitments for $876.31 billion. Of these, $538.9 trillion, or 61%, correspond to internal debt, while the remaining $37.3 trillion, or 38.5%, are external debt.

(See: In 2018, the government debt skyrocketed and stood at 47.2% of GDP).

Expressed in dollars, The total gross debt of the Nation as of May was US$198,771 million, of which US$122,243 million are internal debt and US$76,528 million external debt.

The Figures published by Crédito Público also show that 63.2% of the debt, or $538.9 trillion, are commitments acquired in local currency. This is the same as US$1.361 million. On the other hand, 37.8% of the debt is in foreign currency, which is equivalent to US$ 75,167 million.

It is worth mentioning that 93.6% of the total debt is at a fixed rate and 6.4% has a variable interest rate.

On the other hand, Juan David Ballén, director of Analysis and Strategy at Casa de Bolsa, assured that this reduction in debt can also be explained by other factors.

Colombian local debt.

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“I think it could be two reasons. It may be because with the fall of the dollar the balance in pesos of the foreign debt decreases, and second, because economic growth may have been higher than expected so far. With a higher GDP in the first months of the year, this may have contributed to the fact that the total indicator is better than what was being projected.”indicated.

According to Ballen, the debt has been corrected slightly downwards, but according to the expert, this adjustment should be made more deeply over time, since the projection for the coming years is that it will remain high.

“The most appropriate thing is that this level of indebtedness gradually decreases. The Government has announced that it intends to do pre-financing for 2024 this year, but in the medium term this has a drawback, and that is that it may end up increasing the debt”, Ballen indicated.

(See: Public debt interest rate was below inflation).
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LAURA LUCIA BECERRA ELEJALDE
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