Colombia fiscal deficit may be lower than expected, says finance minister

Colombia fiscal deficit may be lower than expected, says finance minister

BOGOTA, Oct 12 (Reuters) – Colombia’s 2021 fiscal deficit may be lower than previously projected thanks to the recovery of oil prices and better economic growth, Finance Minister Jose Manuel Restrepo said on Tuesday, without giving a new estimate.

The Andean country’s government has predicted a fiscal deficit of 8.6% of GDP and economic growth of 6% for this year.

The government’s economic growth projection is below that of the central bank, which in September revised its prediction to 8.6% because of improved economic performance.

“Our estimate is that for every 10 basis points of economic growth, the economy could create income of around 250 billion pesos approximately, which means that one percentage point could represent close to 2 trillion pesos,” Restrepo told journalists after participating in a conference with business leaders.

Two trillion pesos is equivalent to some $530 million.

“What that is demonstrating is there is an outlook and an initiative for Colombia to grow well above the growth which had been estimated until now,” Restrepo added, without giving any details on possible new growth and deficit estimates.

The government has previously warned that the Delta variant and a fourth and even fifth peak of coronavirus may bring economic impacts.

The government’s annual fiscal plan pegs the average price of a barrel of oil at $63 for this year. Brent crude reached $84.60 per barrel on Monday, its highest price since October 2018.

$1 = 3,765.80 Colombian pesos Reporting by Carlos Vargas Writing by Julia Symmes Cobb; Editing by Aurora Ellis

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