For experts, fiscal change should be done through spending cuts, not through increased tax burden. The budget must be cut to comply with the fiscal rule, they agree.
The General Budget of the Country of the Government of President Gustavo Petro for the year 2025, of $ 523 billion, which represents 29.4% of the national GDP (Gross Domestic Product), is already being processed in the Congress of the Republic.
It is designed to keep public debt and the fiscal deficit “on a sustainable path” and is aligned with the “public-private economic reactivation policy that will help reduce dependence on the fossil fuel economy by to promote agriculture, tourism and re-industry,” the National Government has highlighted.
The Government expects to achieve $12 billion through tax reform, or funding law, that is, it does not have these resources.
That is one of the obstacles found by Corficolombiana. “The General Budget of the Country for 2025 is without enough money,” he said. “We believe that there is room to implement an austerity plan that would at least cover the resources of that project, which would be it would be more convenient, especially in the context of economic stagnation. The fiscal change must be done through spending cuts, and not through a higher tax burden,” he said.
He put the context that an austerity plan can be based on a standard rule, easy to implement and communicate, “which avoids irregularity and tension between departments.” He gave as an example that the increase in operating costs could be limited to the inflation rate expected for the end of the year, with a maximum of two additional points, leading to an increase of close to 7.6%
Some congressmen are proposing to freeze the budget. On the other hand, experts insist that there must be a cut. From Aliadas Alianza, which brings together 35 unions in the country, they have shown that “the best tax reform is austerity in spending and efficient performance. The current budget exceeds Colombia’s economic opportunities; Change is essential.”
For his part, Brus Mac Maistir, president of Andi, has confirmed that the definition of the General Budget of the Country “affects us all. ” He recalled that the 2024 budget “we can barely pay it and we may not pay it and it was $503 billion.”
He noted that tax collection has not been sufficient and has not allowed us to achieve what was expected. In addition, the economy only grew by 0.6% in 2023, and in general Colombia and companies do not have the means to transfer more resources to the State, “so that it can spend important costs, invest or even do it in terms of social investment. .””.
In short, he assured that the State “must adjust according to the resources it has. Fedesarrollo already said, that the only fiscal reform or fiscal policy that is possible at this time is to cut spending. “That the State accepts that the size of the economy we have today, that the capabilities of the economy are the limited ones we have and that it changes accordingly,” said e.
Both Andi and Fedesarrollo ensure that the budget must be cut to comply with the fiscal rule.
Due to low collection, by 2024 there has already been a budget cut of $20 billion.
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