On Wednesday Colombia’s congress approved a 235 trillion COP ($80 billion) budget for 2018 in an effort to retain its BBB credit rating.
The budget outline is the final one for President Santos’ administration, which will leave office in August 2018.
Increasing the country’s budget to $80 billion will represent a 1 percent increase from last year. The main focus will be on education, which will receive 37 trillion COP ($12.6 billion). Second in priority will be the Defence sector – that will receive 31 trillion COP ($10.5 billion).
In addition to these, the government will also put 2.4 trillion COP ($800 milion) into post-conflict projects. Of course, this is following the implementation of the November 2016 peace deal with the FARC, as well as a ceasefire agreement with ELN.
Also revealed during the discussion was the plan to no longer issue any more international bonds, according to Finance Minister Mauricio Cárdenas, in an endeavour to reduce its foreign debt.
“We don’t need more financing from the international markets and we have reduced our borrowing requests with multilateral banks,” he told Reuters.
Cárdenas also stated that,after cooperation with Congress, it has been possible to adjust budgets for health and infrastructure, as well as approving further resources for public universities, hospitals, and roads.
For the past two years, government officials and policymakers have struggled to find hope in a weak economy caused by a worldwide drop in oil prices, as well as battling inflation that last year rose to more than double the bank’s 2 percent – 4 percent target range.
The succeeding government, however, will still have quite a task to deal with. Despite an expectation of a 2 percent reduction in spending, ratings agencies and analysts predict that Colombia may not reach this goal. A recent Reuters survey estimated that number will in fact be closer to 1.5 percent. Santos’ government also hopes that the fiscal deficit will be 3.1 percent in 2018, down from the 3.6 percent expected for 2017.
The 2017 OECD Report analyzed the economic state of Colombia. It stresses that, whilst the economy is generally sound, factors such as low-skill sets among citizens, as well as weak infrastructure are hampering the country’s development.