‘The collection goal will not be met and that is why we adjust spending’: Minhacienda

On the final day of the Asobancaria Congress held in Cartagena, this Friday, June 7, the Minister of Finance, Ricardo Bonilla, spoke about one of the topics that attracts the most attention of the market and the local economic context, especially since Alerts began to go off from different sectors due to a possible cash crisis.

During his speech, Bonilla confirmed that, Indeed, there is a lack of liquidity in the Nation’s accounts, largely caused by a tax collection that is below expectations and that projections show will not reach the ambitious goals that were established for all of 2024.

“The collection has been behaving in an increasing manner, both in current prices and in constant prices, $63 billion was collected in 2019, while in 2020, in the midst of the pandemic, $61 billion was collected, then $68 billion was recovered, there are two tax reforms, these two tax reforms leave us with increasingly growing income, $89 billion in 2022, $116 billion in 2023, this is only as of May“said Bonilla.

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Immediately afterwards, he explained that in 2024, ending in May, the collection has only reached $108 billion, “which means that this year there is a lower collection of 6.5% compared to what had been obtained in 2023”, thus generating one of the first effects.

For the head of the Treasury portfolio, another critical factor was the decision of the Constitutional Court that prevented the non-deductibility of royalties, since this measure has forced the Government to return money withheld in 2023, generating favorable balances for companies. and contributing to the reduction in cash flow.

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“Obviously, in real terms, we have a lower collection compared to the previous year of $7 billion, but in income tax we have a lower collection of $9 billion. The other taxes compensate somewhat, but if we put it against the collection goals, at least as of May, we find that we have a lower income of $15 billion“, held.

With this in mind, the Minister of Finance sincerely the fiscal accounts and was emphatic in recognizing that the goals established for this year will not be met, which is why it is necessary to tighten the belt and review which are those items on which we can begin to cut scissors to free up the budget.

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Thus, Ricardo Bonilla told the representatives of the banking sector that the goal of the National Government, already discussed with President Gustavo Petro, is to cut $20 billion from the spending stipulated in the General Budget of the Nation for 2024, for which will advance the implementation of a two-stage plan.

The first stage will be prioritization of budget requests, in which they have already been working with the different ministries and entities in general, asking them to review what those are. non-essential expenses or that could wait for the cash crisis to be resolved.

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“The Ministry of Finance suspended the issuance of new certificates of budget availability, this is something that we have pending so that the entities prioritize what they are actually going to execute and we do not end up in a scenario where spending is spent for the sake of spending,” said Bonilla. .

The second phase, according to this official, is the identification specific cuts by sector. At this point he made it clear that there are some precise requests from President Gustavo Petro, who was emphatic in stating that this cut cannot affect the social commitments that are being promoted in the different regions.

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“That is also a decision that implies consultation with the different entities regarding what they have been doing, taking into account that what we want is to know where those $20 billion can be cut, in a prioritization exercise with which we hope they will tell us how. will contribute to this adjustment”, he highlighted.

Expanding a little on what the head of state said, Bonilla González pointed out that there are very clear red lines. These areas, which will not be affected by the cuts, include social programs and the Government program. Social expenditures, such as subsidies and welfare programs, are protected to ensure support for vulnerable populations. Also, strategic projects and priority investments will continue without alterations.

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Thus, he said that the spending cut plan will be finalized in the coming days, taking into account that the Council of Ministers on next holiday Monday, June 10, will discuss and approve the necessary measures to adjust the budget, and then issue the corresponding decree.

The Minister of Finance closed by saying that Colombia continues to comply with its debt commitments, highlighting the management of these commitments, both internal and external, and explained that, although debt increased significantly during the pandemic, the Government is working to return to a sustainable debt path in line with the fiscal rule.

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In this sense, he stated that the request to increase the debt quota is due to the need to manage the credits acquired during the health emergency that are not incorporated into the current quota, since this will allow the country to have greater flexibility to manage the debt. public and fulfill their obligations without closing doors to future necessary debts.