Colombia could reduce its budget deficit more slowly – the new finance minister

BOGOTA, Aug 2 (Reuters) – Colombia will continue to cut its budget deficit but may need another year to reach the 2023 target to fund social needs, new finance minister Jose Antonio said on Tuesday. Ocampo.

The series of social programs promised by President-elect Gustavo Petro, who takes office on Sunday, are also expected to be funded by fiscal reforms, including an initial 25 trillion peso ($5.8 billion) bill that the new government will propose on Monday.

The country’s current fiscal deficit plans – overseen by its Fiscal Rule Committee in an effort to prevent deterioration in public finances – include a target of 3.6% of gross domestic product for 2023 and a target of 5.6 % of GDP for that year.

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“If we need another year, I think that’s all we would need, depending on how big of a resource we manage to get in tax reform,” Ocampo told Reuters in an interview.

“Not the current (budget deficit) levels, trending down but closing in on one more year…something a bit more progressive so that we can respond to social demands,” Ocampo said. , 69, who has a doctorate in economics from Yale.

Petro promised to tackle deep inequalities with pension redistribution, free university education and other programs.

Some of his proposals – in particular a freeze on new development in oil, Colombia’s main export – have caused concern in the market. Read more

The appointment of Ocampo – one of Colombia’s most famous economists who previously served as agriculture minister, finance minister and director of national planning – could allay some of those concerns. Read more

“I’m not going to do crazy things or allow crazy things,” he said.

Petro’s policies are “impossible” to pursue without tax reform, Ocampo said.

“We are aiming for maybe, I would say around 25 trillion pesos initially and a gradual increase. A lot of the incremental increase is through fighting escapism, which is huge in Colombia,” he said. he declares.

The new government plans to increase the proposed budget by $91 billion for next year to fund social investment, he added.

The Andean country will not seek financing in the international market in the short term due to the high cost of debt, Ocampo said, turning instead to the local market and multilateral organizations.

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Reporting by Nelson Bocanegra and Luis Jaime Acosta; Written by Julia Symmes Cobb; Editing by Stephen Coates Editing by Chris Reese

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