Colombia Announces Significant Budget Cuts Amid Fiscal Challenges

Colombia's government plans to slash its 2023 budget by 28.4 trillion pesos due to lower tax revenue. This is an increase from a previously planned cut. Finance Minister Ricardo Bonilla will announce details, with an independent committee suggesting even larger cuts may be necessary to meet fiscal targets.

The Colombian government is set to implement a substantial budget reduction of 28.4 trillion pesos, equivalent to $6.44 billion, as a direct response to lower-than-expected tax revenues impacting the nation's finances. This reduction signifies a notable increase from the initial 20 trillion peso cut announced in June.

Finance Minister Ricardo Bonilla is poised to provide further explanation in a press conference. The fiscal strategy aims to maintain a deficit target of 5.6% of GDP for 2024 and 5.1% for 2025, responding to the challenging economic landscape outlined by analysts.

An independent body, the Autonomous Fiscal Rule Committee, has highlighted the potential need for more drastic budget measures, suggesting a trim of 56 trillion pesos might be necessary for compliance with fiscal constraints. Colombia also faces hurdles with its proposed 12 trillion peso tax reform, which seeks to meet budgetary demands for 2025 but is currently encountering slow legislative progress.

(With inputs from agencies.)