THE CURRENT Minister of Finance, Ricardo Bonilla, announced before Congress that the fiscal deficit for 2023 will be 4.3% of GDP, higher than the previous estimate of the Ministry of Finance of 3.8% of GDP.
This as a consequence of the weakness of oil prices as previously mentioned.
In the presentation of the Medium-Term Fiscal Framework for the 2023 term, the Ministry of Finance forecasts that the net debt in 2023 will be 55.8% of GDP (-1.2% compared to the previous forecast).
On the other hand, it revised upwards its GDP growth forecast for this year from 1.3% to 1.8%, while the inflation forecast for the end of 2023 increased from 7.2% to 9.2%.
In this sense, in the medium-term fiscal framework, the new fiscal deficit target will be published together with the expectations of the main macroeconomic variables; in addition to an update of the auctions (internal and external) and the most relevant financial figures with a vision of 2030.
The minister said that the Medium-Term Fiscal Framework is aligned with the objective of the national government to advance the social and economic transformation of the country through a set of policies and structural measures based on what is established in the National Development Plan (PND). ).
This change contemplates a productive transformation and a broad agenda of economic and social reforms, which includes the Tax Reform for Equality and Social Justice, and the pension, labor and structural reform of the health system.
According to the Minister, the financial roadmap makes explicit the Government’s multi-year strategy to achieve this objective and thus pay off the social debt, preserving macroeconomic and fiscal stability.
Adjustment
He pointed out that the Colombian economy is going through a process of gradual adjustment. “The high growth of the economy in 2022, which allowed significant advances in terms of unemployment and multidimensional poverty, would slow down throughout 2023 and 2024 before converging on its medium-term trend above 3%.”
In addition, he highlighted that the short-term fiscal strategy of this administration in response to these challenges closely follows four principles: i) the need to finance social and economic reforms and programs to achieve greater social justice; ii) the sustainability of debt and public finances; iii) strict compliance with the fiscal rule; and iv) the preservation of macroeconomic stability.
Likewise, thanks to the Government’s strategy in relation to fuel prices, the deficit of the Fuel Price Stabilization Fund would be close to 0 in 2024, definitively resolving the challenge that this fund has represented for years for the fiscal stability.
For the medium term, economic growth is projected to recover towards its long-term trend (3.2%). The Government would maintain a strategy of primary surpluses that would simultaneously allow the debt to converge at its anchor level towards the end of the horizon of this Framework and the stabilization of the economy’s external liabilities to be achieved.
The productive transformation, which includes the reindustrialization policy and the energy transition, would be both the engines of growth and of external adjustment in the medium term.
The document indicates that by 2023, CNG financing needs are estimated for $122.7 trillion (7.7% of GDP), of which 4.3% of GDP is used to cover the fiscal deficit explained by the payment of interests.
From the perspective of the sources, disbursements of $70.7 trillion (4.4% of GDP) are contemplated, of which 39% corresponds to external debt, and 61% to internal debt. Likewise, these disbursements are nearly $10 trillion higher than those projected in the December Financial Plan Update, as a result of the pre-financing strategy for the needs of 2024, the greatest value of which will remain in the final availability of cash this year. anus.