Colombia government will not change proposed 2025 budget value, finance minister says

5:27 pm Tuesday, September 17th, 2024

By Nelson Bocanegra

BOGOTA (Reuters) – Colombia’s government will not modify the value of 523 trillion pesos ($123.9 billion) for its proposed 2025 budget, Finance Minister Ricardo Bonilla said in an interview on Tuesday.

Furthermore, if Congress does not approve a proposed fiscal reform, which it hopes will raise an additional 12 trillion pesos, the government will look to cut costs, he told Reuters.

“The budget will remain within the threshold of 523 trillion pesos, which is financed with 511 trillion pesos and a law covering the remaining 12 trillion pesos,” Bonilla said.

If the budget is rejected by Congress, the government will look at pushing it through via decree, Bonilla said, in line with comments made earlier this month by President Gustavo Petro.

If the budget and fiscal reform are only partially approved, the government will make adjustments to how the money is spent, Bonilla said.

Congress has refused to approve the proposed budget amount, saying some of the proposed sources of financing are not realistic, such as the collection goal set for efforts to tackle tax evasion and avoidance, among other measures.

Elsewhere, Bonilla said he was confident the central bank board would cut the benchmark interest rate by 75 basis points to 10% at its meeting at the end of September.

Bonilla represents the government on the seven-member board, which has cut the rate in increments of 50 basis points during its last four meetings.

“I had originally still considered a cut of 100 (basis) points, but what I have finally chosen is to see if it’s possible to find majority support for 75 points, thinking about market expectations,” said Bonilla, who expects the rate to close 2024 at 8.50%.

Bonilla said the government did not agree with the central bank’s technical team, which eyes the benchmark rate closing the year at 9.25%.

Colombia’s economy could grow closer to 2% this year, Bonilla said, rather than the 1.7% forecast by the government.

He also forecast inflation could end the year at 5.3%, still above the central bank’s 3% target.

Bonilla said he expects to travel to the U.S. within a month to meet with several ratings agencies, as well as with Colombian bondholders, to discuss future foreign debt placements.

($1 = 4,220.58 Colombian pesos)

(Reporting by Nelson Bocanegra; Writing by Oliver Griffin; Editing by David Gregorio)