The Colombian government’s fiscal gap will likely fall below 3% of GDP in 2011 due to higher than expected tax revenue, stated Finance Minister Juan Carlos Echeverry in a Friday interview with Reuters America Latina.
The collection of taxes in the first trimester of the year was around $537,000 (COP 1 billion) above the government’s goal, said the minister. In a best case scenario, the year’s collection goal of $40.682 million (COP 76.1 billion) could be surpassed by as much as $2.138 million (COP 4 billion), said the minister.
If these results come to pass, the government could close out this year with a fiscal deficit below the central government’s goal of 3% GDP while at the same time diminishing the projected increase of internal debt by $14.968 million (COP 28 billion). For 2012, the deficit is likely to decrease further to around 1.5% of GDP.
“If we were to have a significant over collection [of taxes] the best thing is to lower debt and pay less interest, which is virtuous because as well as collecting extra, it also lowers the expenses, so the deficit decreases through both routes,” said Echeverry.
The minister also revealed that the government plans to invest some of the revenue produced by the state petroleum company Ecopetrol into foreign debt repayment, but in gradual manner.
The statements made by Echeverry come on the heels of a Thursday report that Colombia’s fiscal gap has grown from 3.9%-4.1% of GDP, reaching $129 billion, due to the winter’s heavy flooding and government financial reforms.