The absence of a fiscal reform would increase the government debt to a figure that would exceed 100% of GDP in 10 years. Currently, it exceeds 50%.
This is one of the estimates made by the Central Bank when analyzing the suitability of the Bill for the Strengthening of Public Finances, approved in the first legislative reading on October 5th.
Rodrigo Cubero, president of the Central Bank, explained the support the entity and stressed that the measures included in the project are aimed at bringing order to government spending and revenues.
According to the analysis of the Monetary Authority, even if the reform was approved, the amount of the debt would continue to grow until the year 2023, when it would reach 65% of GDP, but it would begin to decrease in 2024.
By the end of this year, the Central Bank estimates that the fiscal deficit will exceed the equivalent of 7.2% of GDP, the highest figure in three decades. A year later it would reach 7.5%.
The deficit is clearly unsustainable. The serious imbalance has already had a serious impact on the country, the Government’s financing has already generated a rise in rates and this has discouraged consumption and investment,”
said Cubero.
According to the head of the Central Bank, the trajectory of the Government’s imbalance could lead to a deep crisis, with effects on employment and the well-being of the population.
According to the calculations of the Central Bank, the reform would have an initial return of 0.91% of GDP in its first year (2019) and reach its highest point at 3.7% of GDP in 2022.
It is concluded that the bill as it was approved on October 5 restores the stability of public finances in the long term,”
determined Cubero.