Colombia congress commissions approve extra $1.8B for 2013 budget

The finance committees of both Colombia’s Senate and House on Thursday agreed to increase the government’s 2013 budget with almost 2% to cover newly surged government expenses.

Congress had been asked to raise the budget by Finance Minister Mauricio Cardenas who said the government needed to spend more than agreed when the budget initially was approved in October last year.

If also approved by the plenary chambers of both the Senate and the House, the budget will go from COP185.5 trillion ($98.1 billion) to COP188.9 trillion ($99.9 billion).

According to Cardenas, the increased government spending will be compensated with increased tax revenue brought in by a new equality tax which was approved after the budget.

MORE: Colombia passes progressive tax reform

“This does not mean more debt. This does not mean a bigger deficit. It simply that a new income, the Cree [or Equality] Tax, is included in the budget with the corresponding cost,” the minister told Congress.

The Colombian government wants to use the newly created budget for the following:

  1. Road infrastructure – $529 million
  2. Subsidies for coffee sector – $272.4 million
  3. Business credit and innovation – $52.9 million
  4. Prison investment – $52.9 million
  5. Scrappage program – $45 million
  6. Employment generation – $29.1 million
  7. Expansion police force – $24.3 million
  8. Energy and mining investment – $21.2 million

The largest budget increase was earmarked for the improvement of road infrastructure, which has long been considered the biggest bottleneck of Colombia’s trade and development. Congress approved over half a billion to upgrade the country’s infrastructure system.

MORE: Colombia’s infrastructure hinders development

The second largest chunk of the newly released budget will go to subsidies for Colombia’s ailing coffee industry. Following years of diminishing coffee prices and an expensive peso, coffee growers massively went on strike earlier this year claiming the production cost of coffee had outgrown the market price. The government agreed to increase subsidies per produced bag of coffee.

MORE: Thousands of Colombia’s coffee workers go on strike
MORE: Colombia’s coffee strikes end after agreement reached

“Never before have a congress and an administration executed a plan like this to support the coffee growers,” Cardenas said. However, senators of the Liberal Party and the PIN claimed the subsidies granted to the sector are not effectively reaching the coffee farmers. “The current system isn’t working. It must be changed and [we must] find consensus to make a new one,”said Liberal Party Senator Rodrigo Villalba.

The investment in Colombia’s prison system was added last to the Finance Minister’s wish list after months of unrest and lawsuits that forced prison authorities to close prison doors of overcrowded penitentiaries for new inmates. The reduce the overcrowding rate, the Justice Ministry needs money to build 26,000 extra cells.

MORE: Colombia plans to fight prison overcrowding with 26,000 new cells

Sources

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