On Wednesday morning, Minister of Finance Rocío Aguilar spoke before the legislators of the Committee on Taxation to present the draft budget of the Republic for 2020, which sees a reduction for the first time in ten years.
The Treasury predicts that next year ¢10.5 billion will be needed, that is, 4.3% less than in 2020.
Aguilar recognized that the high level of debt and low interest of the government consume a large part of the budget and that this limits the execution of social development projects.
The principles that should move the budget of the Republic are fundamentally the protection of a welfare state and that can only be achieved as long as there is a consolidation of public finances, to achieve stability, growth and social stability; however, we bring more than ten years of accumulated fiscal imbalances and year after year expenses were growing and revenues grew very little (…) The debt will continue to grow and will not be eliminated in the short term (…) will have to work in a citizen-oriented budget,” said the minister.
For the 2020 budget, the reduction is mainly explained because the country managed to lower the impact of debt amortization, that is, through the exchange of securities with closer maturities for longer-term ones, hence the interest payment pressure was removed.
The approval of the tax reform generated more confidence in the financial market and allowed to postpone these maturities.
Aguilar also said that the application of the fiscal rule was more successful than expected, because although the expenses ceiling for non-financial public entities was 4.67%, they had proyected an expenses growth of 3.91%
In addition, the budget was again financed for the most part (52%) with taxes, and the rest with debt.