Tendencia Económica No. 218

Abstract

Editorial: On June 15, the Ministry of Finance and Public Credit (MHCP) presented the 2021 Medium-Term Fiscal Framework (MFMP), which outlines the fiscal and macroeconomic policy roadmap of the country for the next ten years, and the economic growth, fiscal balance and public debt scenarios are presented, as well as the strategies that will lead to these results. We consider that there are five elements of the MFMP that have an important impact on public finances in the coming years: i). the estimated effect of the DIAN modernization strategy on tax revenues, ii). the asset optimization strategy that the Government plans to carry out in the next two years, iii). the Social Investment project, which plans an increase in public spending in the next fiscal years to address the pandemic and economic reactivation, iv). the high levels of public debt projected in the long term, and v). the proposed modifications to the fiscal rule, which will have repercussions on the country's fiscal goals and their sustainability in the medium term.

Actualidad: Oil prices have skyrocketed so far this year, rising to highs not seen since 2018. This has been the result of demand growth, driven by a strong economic recovery in countries like China, a large stimulus package in the United States and global optimism about the vaccination process. Brent has risen 52% compared to 2020 prices, when an average price of US 43.2 per barrel was observed, after the COVID-19 pandemic caused a decrease of 8.2 million barrels per day (mbpd) average demand (8.2%), which led to a contraction in supply of 6.5 mbpd (6.5%) (EIA, 2021). In this context, some analysts predict a rebound in prices to levels of $ 100 per barrel (a level not recorded in almost seven years), thus creating a new ‘supercycle’ in oil prices.