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Few options for financing remain

As approved by the Legislative Assembly, and still pending publication in the Official Gazette at the end of this note, the State General Budget Law for 2021, for more than $ 7.4 billion, left the Government with limited options for the long-term financing.

The project had financing for $ 1,575 million, but in the end it was approved for $ 1,412 million, which shows a reduction of about $ 162 million. Of these, $ 138.7 million correspond to the placement of securities in the stock market, $ 1,041 million to the authorization of the search for loans from Legislative Decree No. 608 due to the emergency of covid-19 and $ 233.2 million for loans.

Ricardo Castaneda, an economist at ICEFI, states that there is still no certainty about the 2021 General State Budget Law until it is published in the Official Gazette, but that some loans (for $ 250 million for municipal governments and reinforcements to the increase in the minimum pension) may imply that “the accounting balance” has been lost.

In other words, there are expenses that do not have funding sources, which may mean that it is unconstitutional.

“If there is an expense without a source of financing, it implies that resources must be moved from other items or other financing approved to get it started,” says Castaneda. In addition, it must be taken into account that the current expenses approved for this year total $ 5,648 million and experts have repeatedly warned that collecting $ 5,692 million in taxes, about $ 870 million more than in 2020, is unattainable.

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