He Fiscal Council He pointed out that both for this year and for 2024 there is “a high probability” that the Ministry of Economy and Finance (MEF) will not comply with the fiscal rule.
It should be noted that the fiscal deficit has a limit of 2.4% of GDP, but as of November, the CF estimates that it was already at 2.7% of GDP—0.3 percentage points above.
“It (the probability of failing to comply with the fiscal deficit rule) is significant to a large extent, to the inadequate practice of matching the projections of the Multiannual Macroeconomic Framework with the limit established by the fiscal deficit rule on a recurring basis”said the autonomous public entity in a statement.
The Fiscal Council adds that current income would have fallen by 10.6% in real terms, while the expected collection in the last MMM is 6.2%. Thus, the MEF “announced measures to reduce the fiscal deficit and comply with the rule” such as S/1,000 million for the Banco de la Nación – as an advance on profits – and they even announced that public spending could be rationalized with the Programming of Commitments Annual.
“A possible rationalization of spending at the end of the year is opposed to the issuance of supplementary credits throughout 2023 for more than S/12 billion, affecting the predictability of the annual budget,” they added, but not before arguing that the advance of profits in the Banco de la Nación “is not a good corporate or fiscal practice.”
Kurt Burneo: conflict between CF and MEF further deteriorates expectations
The former Minister of Economy and Finance, Kurt Burneocalled “the bickering” between the president of the Fiscal Council (CF), Carlos Oliva, and the head of the MEF, Alex Contreras, as absurd, which further affects expectations.
The day before, Contreras Miranda questioned the statements of Oliva—who told Semana Económica that the MEF carries out an “accounting makeover”—and asked him to be more cautious because it could undermine the country’s credibility.
Source: Larepublica
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