Colombia expects its budget
deficits to grow more than initially forecast this year as the
global economic slowdown hits state tax revenue and raises
debt-servicing costs, the finance minister said on Monday.
The government of the Andean country, an exporter of
coffee, coal and nickel, has already cut its outlook for growth
this year to 3 percent from an earlier forecast for 3.5
Finance Minister Oscar Zuluaga said the government is
increasing its targets for budget deficit indicators to reflect
the worsening global situation, saying it expects a shortfall
of 5.5 trillion pesos (about $2.5 billion) this year.
“These estimates are being revised due to a lower level of
income, less tax collection and a greater cost pressure caused
by interest rates,” he told a news conference in Bogota.
However, he said the nation’s financing needs for 2009 have
already been covered and the decision to raise the deficit
targets does not “put medium-term fiscal objectives at risk.”
“At the moment, the financing plan is financed and it will
end up with a surplus of more than $400 million,” he said.
The government upped its target for the 2009 central
government deficit to 3.2 percent of gross domestic product
(GDP) from a previous outlook of 2.6 percent of GDP.
The target for the consolidated budget deficit, which also
includes local government and the central bank, was raised to
1.8 percent of GDP, up from an earlier target of 1.2 percent.
Zuluaga said the primary budget is expected to show a
deficit of 300 billion pesos, compared with the
administration’s initial expectation for a surplus of 1.6
However, he said the government of President Alvaro Uribe
does not plan to change the amount of peso-denominated local
TES bonds it sells in 2009.
He added that Colombia could access to up to $6 billion
from the International Monetary Fund’s emergency short-term
liquidity fund if it needed to.
The facility was set up by the IMF in late October to help
emerging market economies weather the global crisis.
Earlier this month, Colombia sold $1 billion worth of
10-year bonds and Zuluaga said that sale, coupled with pledges
of $2.4 billion in credit from multilateral lenders, meant the
government could cover the 2009 shortfall and next year’s
financing requirements. (Reuters)