Thinking about the adjustment of the State’s accounts, the Ministry of Mines and Energy, the Ministry of Finance and the Creg (Energy and Gas Regulation Commission) reported that since October a new price of gasoline began to govern, with an increase of $200. In this way, the average in the 13 main cities was $9,380. This is the first of three increases to be made before the end of the year.
The increases are motivated by the deepening of the debt that the State has acquired with Ecopetrol by the Fuel Price Stabilization Fund (Fepc), which between January and August had caused about $24.7 billion, according to estimates of the Autonomous Committee of the Fiscal Rule (Carf).
(Read: Increase in gasoline for 15 months would reduce the deficit by $9 billion).
According to calculations by Corficolombiana, if the Fepc were added to the accounts of the Central National Government (GNC), the fiscal deficit would not be 4.8% as they expect at the end of the year but 7%, that is, 2.2 percentage points higher.
It is expected that at the end of the year, this figure reaches $38.4 billion, given that the barrel of Brent has climbed this year to more than US$130 and the average until September was US$102.3. Since the price of diesel and regular gasoline are regulated by the Fund, their monthly variations depend on the entities.
This year three adjustments have been made: in January, July and October. Although the Medium-Term Fiscal framework recommended hikes from June and consecutively to manage the Fepc’s debt, these were not made.
Now, this October decision applies only to gasoline, since President Gustavo Petro indicated that diesel would not rise. This means that the correction of the deficit is only partial, given that fuels contribute in almost the same proportion to the Fund, explained Andrés Velasco, technical director of Carf. Velasco pointed out that the three adjustments will mean a reduction of $600,000 million if they are all $200 and they are only made for gasoline.
This is because the increase that should be given to achieve international parity prices is between $6,000 and $8,000 for gasoline and $12,000 for diesel.
Felipe Bayón, president of Ecopetrol, assured that currently the Fund pays them between 30% and 40% of the total gasoline and about 50% for diesel. This is what needs to be corrected.
For this reason, the hikes should aim to close the gap and thereby reduce the debt that is being acquired. In fact, the Committee estimates that if continuous increases of $200 are made for gasoline alone over the next 15 months, the 2023 deficit would be reduced by $9 billion, bringing total debt next year to $29.5 trillion.
And to cover this debt that would be caused the other year, the government has proposed that 1.3% of GDP be allocated from the General Budget of the Nation (PGN) for this payment. This represents $19 billion, but a remainder would remain uncovered.
(Also: Who wins and who loses with the rise in gasoline).
Now, the Minister of Finance, José Antonio Ocampo, explained that the next year when inflation begins to subside, it is possible that the adjustment of diesel will be considered and make that of gasoline as stipulated in the Medium-Term Fiscal Framework (Mfmp) , which was $400 per gallon. With this, the imbalance in the Fepc would be corrected faster.
Gasoline.
One of the criticisms leveled at the Fepc is that its debt does not fall within that of the National Central Government, so it does not affect the fiscal deficit, but falls into the “rest” category. This has led Carf to consider that it should enter the CNG.
The debt that this year could acquire the Fund round 2.5%, according to Corficolombiana; that is, just over half of the nation’s fiscal deficit, which is 5.6% (according to the Mfmp). However, the entity expects that with the rebound this could be 4.8% of GDP.
If they joined the CNG, the situation would be much more serious, which would worsen the fiscal situation, given that the fiscal balance would reach -7%. For his part, Andrés Velasco, director of Carf, also shows that the deficit would be 7.3% if the debt caused this year is taken, compared to GDP.
(Read: With new regulation biodiesel will help fuel deficit).
José Ignacio López, director of Economic Research at Corficolombiana, explained that “due to centralization we look at the CNG and funds remain outside that distort fiscal accounts.” For this reason, he pointed out that for transparency there should be more clarity in the accounts.
Daniela Morales Soler
