LatinNews Daily - 10 July 2024

*Colombia’s President Gustavo Petro has announced that his government will need to reduce public spending by Col$39trn (US$9.71bn) next year in response to mounting fiscal pressures. Petro said that “in the most negative, but the most realistic scenario”, his government will “have to reduce public investment from Col$96trn this year to Col$57trn next year”. Congress has already approved a request from the government to raise Colombia’s debt ceiling so that the country can pay its creditors, approving US$17.6bn of additional debt. The worsening fiscal situation is partly due to overly optimistic forecasts on tax revenue, which were not met amid an economic slowdown and judicial rulings that struck down new taxes on the mining sector. In remarks that were cited in the local media, Petro said that the problems stemmed from the decision by his predecessor Iván Duque (2018-2022) to take on more debt during the coronavirus (Covid-19) pandemic, which Colombia is now struggling to pay back. He said that he would have preferred to print more money rather than taking on additional debt. But, he said, “in Colombia there is too much economic fundamentalism and printing money is seen as satanic… they did it in order to save the bankers, but not to save the lives of people endangered by the pandemic – what they did was burden us with debt, which unfortunately needs to be paid back over the next two years.”