Colombia’s government expects to receive $1.1 billion in oil revenue in 2016, a fraction of the $6.7 billion generated in 2014.
While debating the government’s 2016 budget proposal in Congress, Finance Minister Mauricio Cardenas revealed how much the dropping oil prices are hurting revenue from royalties.
In spite of producing approximately a million barrels of crude oil a day, Cardenas explained that oil revenue in 2016 is likely to be no more than $1.1 billion (COP3.3 trillion).
This is six times less than last year when the government received $6.7 (COP19.7 trillion) and seven times less than in 2013 when royalties brought in $8 billion (COP23.6 billion).
Also for this year, the government expects to receive less than half the oil revenue it received in 2014.
Government revenue from oil
To counter the major loss in revenue from oil, the administration of President Juan Manuel Santos plans to increasingly combat tax evasion.
Revenue from taxes should increase $3 billion between 2015 and 201, compensating the drop in oil revenue.
According to Cardenas, tax revenue will go from $39.8 billion (COP117 trillion) to $42.8 billion (COP126 trillion).
Nevertheless, the government defended its proposed austerity measures in case tax revenue doesn’t increase as projected.
Moreover, the government on Tuesday was warned by the Comptroller General’s Office over a $5.1 fiscal gap for the 2014 fiscal year, spurring the fiscal watchdog to urge the government and Congress to be “prudent” in allocating funds in the 2016 budget.
To close the holes, the Santos administration plans to reduce government investment with $1.6 billion.
Congress will be debating the budget proposal in the coming weeks.