Colombian Finance Minister Mauricio Cardenas cut the government’s oil price forecast, saying this could spell more austerity measures in order to meet the country’s fiscal deficit goal.
He cut the estimate for this year’s average oil price to $34.7 per barrel from an initial $50, adding that the tumble in oil prices will affect the Andean country’s tax intake and economic growth.
“We have to get used to these new oil prices, this will probably mean more measures of economic austerity to meet our deficit goal,” he said during an economic conference in Bogota.
The forecast for Colombia’s oil production was also reduced, to 944,000 barrels per day from a former projection of 955,000 bpd. Latin America’s No. 4 economy is aiming for a fiscal deficit equivalent to 3.6 percent of GDP, above last year’s 3 percent.
Cardenas said an increase in the current accounts deficit could be tackled by tightening monetary policy. “We have to use all the political tools to adjust the current accounts deficit. It is necessary for the path of rate increases to continue,” he added.
The central bank will likely increase its benchmark lending rate by 25 basis points at its upcoming meeting on Friday, as inflation is expected to continue to rise, according to a Reuters survey on Monday.
(Reporting by Carlos Vargas and Nelson Bocanegra; Writing by Alexandra Ulmer; Editing by W Simon)