What would happen for the country’s fiscal situation during 2025?

2024, although it has shown signs of recovery, thanks to the continued fall in inflation, the reduction in interest rates and GDP growth figures, continues to generate concerns regarding the tax situation of the country.

In recent months, doubts about the state of the Nation’s coffers arise especially from three situations: the reform of the General Participation System (SGP), the drop in tax collection this year by the Dian, and the discord that revolves around the amount of the General Budget of the Nation for 2025.

(You can read: Financial risk of public IPS: more than $12.4 billion in portfolio and growing deficit).

These factors have enormous weight, since the country’s ability to spend or receive income depends on them.

For example, according to the Autonomous Committee of the Fiscal Rulethe reform of the SGP, which has the objective of increasing transfers from the State to the municipalities and departments, could have a cost equivalent to double that of the last tax reform.

In the case of tax collection, the drop in this until September was nine billion pesos less than the adjusted mint in the Medium-Term Fiscal Framework and 55 billion less than what was initially provided in this year’s General Budget of the Nation.

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According to analysts cited by the individual savings pension fund Skandiathe combination of growing spending and lower income means that the country’s risk premium, used to evaluate the payment of the country’s external debt, remains the highest in the region. They explain that it is because the markets see it as more likely that the country will not comply with the Fiscal Rule.

Insufficient trimming

Although the National Government announced a cut of 33 billion pesos in public spending, this would still not be enough to comply with this year’s Fiscal Rule. According to the Great Davivienda Financial Assets Survey, The institutional investors investigated project a probability of 71% that the Fiscal Rule will be breached.

Among the impacts of the country’s current fiscal situation, we can mention a possible drop in foreign investment, higher TES bond rates, depreciation of the peso against the dollar, loss of investment grade and lower economic growth.

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“For investors, the fiscal issue is key, because it reflects a country’s ability to meet its financial obligations and maintain fiscal stability.“explains Skandia.

This would also have repercussions on the pockets of Colombians, since, if the situation continues like this, there would be a greater risk of taxes rising to remedy the deficit, the creation of fewer jobs due to the reduction in investment, the increase in the cost of credit due to the distrust of the markets, the loss of value of savings and investments due to the devaluation of the currency and less public spending and investment.

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