Petro government warns that the budget and financing law are different processes

Financing Law and General Budget of the Nation are two terms that have been mentioned a lot in recent days due to the debate that is taking place in Congress to define the income and expenditure accounts for next year and that has the Legislative and Executive branches facing each other. They fail to reach an agreement on the amount, destination and sources of financing.

As proposed by the Ministry of Finance, the idea is that the PGN 2025 The budget is $523 billion, of which $12 billion depend on a financing bill that seeks to cover the shortfall through a change in the tax system, which did not go down well with the economic commissions, where they do not agree that fiscal sustainability depends on tax reform in times of slowdown.

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This situation has led several analysts and research centers to point out that there is a risk of underfunding due to the dependence observed between the financing law and the budget. However, in a recent statement, the National Government said that this is not the case and that the two initiatives are independent, both in terms of their process and in the purpose they project for the Nation.

According to the National Planning Department, this debate talks about two simultaneous processes that will be processed independently in Congress, but that have a common objective, which is to serve the most vulnerable communities in the country and guarantee a effective investment that helps close the poverty gaps that exist in the regions.

“The National General Budget (PGN) is an instrument that details the income and expenses of the State each year, defining how the State’s resources will be invested. The PGN is the result of a joint effort between the Government and the Congress of the Republic to prioritize resources to meet the country’s needs,” the DNP began by saying.

This entity indicated in a statement that although the budget accounts for next year are a sign of the commitment to the sustainability of public finances, “in strict compliance with the Fiscal Rule and all legal commitments of the State.” It could not be overlooked that as a “consequence of macroeconomic and fiscal restrictions, as well as the high rigidity resulting from decisions and debts inherited from previous governments, it became necessary to present a Financing Law.”

The aim of the latter is to obtain additional resources to finance a minimum of strategic investments that would otherwise be underfunded, without permanently changing existing tax laws.

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“Presenting a draft PGN Law and, simultaneously, a Financing Law is not something new, and different Governments in the past have also done so. This is supported by article 347 of the Political Constitution, which empowers the Government to process a Financing Law when the expected income is not sufficient to cover the minimum expenses that the State plans to assume for maintaining the living conditions of the population,” explained National Planning.

Regarding the budget, they added that it was previously approved by Confis and Conpes, which for them confirms that the calculations reflect the economic and social priorities of the country, so currently, the project is in its first phase of discussion in the joint economic commissions of Congress, who have to analyze it and approve it before September 25 in the first debate.

“Later, in the first week of October, the project will go to the plenary sessions of the Chamber.“The Senate will be the next one, where new speakers will be appointed for the second debate. The objective is that the budget will be approved in its entirety before October 20. Finally, President Gustavo Petro must sanction it before December 30,” they said in this entity.

On the other hand, regarding the financing law, they said that although some sectors of society have stated that this bill is a tax reform, it is necessary to take into account that in addition to financing the budget for the next period, unlike a tax reform, it raises broader elements than just modifications to the tax statute.

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“While the approval of this law is crucial to finance items included in the budget, it is processed independently of the budget process. Both bills are necessary to ensure that Colombia have the resources and tools to face current and future challenges,” they said.

That said, the director of the National Planning Department, Alexander López, concluded by saying, “Our commitment is to every Colombian. We want them to understand that these processes, although separate, are fundamental to the development of the country. We invite Congress and society to move forward together, prioritizing the well-being and progress of all.”