Colombia’s Finance Minister Alberto Carrasquilla said Tuesday he had requested the International Monetary Fund (IMF) to extend a $11 billion loan to confront the coronavirus pandemic.
The announcement came days after the World Bank bank extended a $250 millon credit line as part of a regional aid initiative and while Carrasquilla is trying to somehow balance the budgets for 2020 and 2021.
The perfect storm
The government’s budget and the economy in general are not just taking a major hit because of the pandemic, but also because dropping oil prices sunk the peso.
While revenue dropped, the government embarked on a major spending spree to bolster Colombia’s fragile healthcare and financial systems, and provide food while the country is in quarantine until at least April 26.
Meanwhile, much of the country’s economic activity has come to a standstill.
According to W Radio, the lost revenue and increased public spending would add another $6.4 billion to this year’s budget deficit that was projected to be $6 billion.
Finance Minister Alberto Carrasquilla
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Healthcare overtaking defense in 2021 budget draft
According to the Health Ministry, $1.2 billion (COP4.9 billion) of this would be the cost for healthcare alone.
For the first time in history, Colombia’s finance minister drew up a preliminary draft budget for 2021 in which the healthcare sector would receive more than defense.
Preliminary 2021 draft budget priorities
Source: Finance Ministry
Whether the healthcare budget will remain as high as projected or require even more, depends on how long the coronavirus is going to swallow emergency spending, according to former Health Minister Jaime Arias.
The former minister said that the initial budget to confront the coronavirus came short and that even the increased spending wouldn’t be enough to fill up the historic healthcare deficits.
Former Health Minister Jaime Arias
The future of Colombia’s economy a wild guess after coronavirus and oil price war
From economic crisis to financial crisis?
The cost of healthcare isn’t the only thing keeping the finance minister awake at night.
In a virtual meeting with the House of Representatives, Carrasquilla expressed concern over the stability of the country’s financial sector.
Finance Minister Alberto Carrasquilla
Both the central bank and the finance minister have already pumped billions into the financial sector to prevent the possible failing of banks, but this was apparently not enough to ease Carrasquilla’s worries.