Following the approval of the delegation of powers to the Executive Branch to spend more money than there is until 2028, the CF warns that unnecessary risks will be taken by modifying the path of fiscal consolidation.
Congress granted legislative powers to the Executive Branch to stimulate the reactivation of the economy —among other matters— and, in the fiscal section, will allow them to increase the deficit for a few years and only reach 1% of GDP in 2028.
In detail, the limits for the fiscal deficit were moved from 2% to 2.8% for 2024; from 1.5% to 2.2% for 2025; from 1% to 1.8% for 2026; from 1% to 1.4% in 2027 and only in 2028, would it converge to 1%.
The Fiscal Council warns that modifying the entire fiscal consolidation path would imply assuming significant and unnecessary risks, and therefore considers it prudent to change it only for this year.
According to the entity chaired by Alonso Segura, With the economic recovery underway and current mineral prices, there are reasons to believe that tax revenues may increase in 2025, thereby adjusting the fiscal deficit to levels similar to those of the rule without sacrificing the planned spending levels.
“The extension of the current fiscal deficit target for this year should reflect a commitment to greater discipline that limits increases in public spending and initiates fiscal consolidation from the current year,” the CF said.
Finally, they recommended that any changes to the fiscal rules be subject to their prior non-binding opinion.
Source: Larepublica
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