Tendencia Económica No. 219

Abstract

Editorial: The fiscal rule in force in Colombia has made it possible to advance towards fiscal sustainability and implement countercyclical policies that have supported economic growth. However, although this instrument has managed to reduce the deficit path of the national government, its implementation has not implied a permanent reduction of the debt. In line with this, the Ministry of Finance has proposed a series of modifications to the current fiscal rule, where the main change is the setting of operational goals on the structural net primary balance, which would explicitly depend on the government's net indebtedness and would allow have greater control over the evolution of this variable.

Actualidad: Colombia is currently facing significant economic challenges because of the COVID-19 pandemic and its effects on the country's public finances. This situation modified the fiscal planning of the Ministry of Finance and Public Credit, not only for 2020, but also for the validity of 2021 and 2022. In this context, although we highlight the importance of having a public budget that contributes favorably to recovery economic and social demands that the country will demand once the economic emergency ends, we also consider essential the approval of fiscal measures aimed at increasing public revenues in order to guarantee the financing of the PGN.