Colombia’s fiscal deficit for the 2016 will be wider 3.9% rather than the 3.6% of the country’s GDP announced last year, the country’s finance minister said Wednesday.
Due to dropping global oil prices, the Colombian treasury’s primary revenue stream has been severely cut.
This revenue drop is “the biggest shock to our income that the national government has received in recent history,” Finance Minister Mauricio Cardenas told reporters in Bogota on Wednesday.
Santos cuts 3% of Colombia’s 2016 budget amid economic slowdown
The lack of income forced Cardenas at the end of last year to present a 2016 budget that had a fiscal deficit of 3.6% of the country’s GDP in spite of major spending cuts.
However, the ongoing economic headwind has forced the government to increase the deficit for this year from 3.6% to 3.9%, falling to 3.3% in 2017, Cardenas said.
But the low oil prices are now really beginning to hurt Ecopetrol, the country’s state-run oil company.
According to Bloomberg, the oil company may not be able to pay dividend to its shareholders unless the price of a barrel of oil stays above $42.