Colombia’s consolidated public sector deficit, which includes regional governments and state-owned firms, closed 2010 at 3% of gross domestic production, Finance Minister Juan Carlos Echeverry said Wednesday.
The figure is below the government’s target, which pointed to a 3.6% consolidated deficit for the year. The government projects that its consolidated deficit for 2011 will be equivalent to 3.4% of economic output.
Colombia is trying to reduce its long-running deficit in a bid to secure investment-grade status for its debt. Echeverry has said in the past that Colombia could recover the coveted investment grade, which it lost a decade ago, in the first half of this year.
Echeverry said Wednesday during a conference that Colombia’s foreign debt stood at 27.7% of GDP at the end of 2010.
The government expects to increase its tax revenue in 2011 by 15.4%, Echeverry added. The tax intake is set to increase after President Juan Manuel Santos decreed that a financial transactions tax will remain in place until 2014. Santos also lowered the threshold on a wealth tax, which is set to increase the government’s tax collection.
Colombia is turning to higher tax collection to offset the impact of higher spending needed to pay for reconstruction efforts after devastating rains lashed much of the country in the last months of 2010. The government plans to use the increased tax intake to create a 6.3 trillion peso ($3.38 billion) “calamity fund” for spending between 2011 and 2014.