Colombia raises 2023 deficit target to 4.3% of GDP

"The updated scenario of the fiscal plan projects that the fiscal deficit of the national government will close 2023 at 4.3% of GDP, 1% less than the 5.3% recorded in 2022 and a figure coherent to the trajectory of the fiscal rule," the government and allied lawmakers said in a budget increase proposal. The reduction in the deficit compared to 2022 will be due to an increase in tax revenue and capital, which will compensate for a 2.7% increase is spending, especially on social programs, the document added.

Colombia's government on Tuesday raised its fiscal deficit projection for 2023 to 4.3% of gross domestic product, up from a previous estimate of 3.8% but below the figure recorded last year, a government document showed.

Finance Minister Ricardo Bonilla had said last month that the projection was likely to be revised upward, but said it would remain well below 5%. "The updated scenario of the fiscal plan projects that the fiscal deficit of the national government will close 2023 at 4.3% of GDP, 1% less than the 5.3% recorded in 2022 and a figure coherent to the trajectory of the fiscal rule," the government and allied lawmakers said in a budget increase proposal.

The reduction in the deficit compared to 2022 will be due to an increase in tax revenue and capital, which will compensate for a 2.7% increase is spending, especially on social programs, the document added. The government of President Gustavo Petro, who has pledged to fight inequality with sweeping reforms, is asking lawmakers to approve a $4 billion addition to the budget to shore up social and other spending.

The government will release its mid-year update to fiscal projections on Wednesday.