One month before the end of 2018, the government’s fiscal deficit exceeded ¢1.9 trillion, according to the Ministry of Finance. This figure is equivalent to 5.6% of the Gross Domestic Product (GDP). The Central Bank’s estimate for this year is 7.2% at the end of December.
In the eleventh month of the year, the accumulated central government current income continues with the downward trend observed since 2016, showing the lowest growth rate in the last five years.
The main factors that explain this behavior are:
-Lower vehicle imports which affects the collection of the selective tax on consumption, which for November presents a fall of 9.2% compared to 2017.
-Smaller increase in the collection of sales tax.
-Disconnection between economic growth and tax collection and in particular, as the International Monetary Fund has indicated,
-the impact of the uncertainty generated by the process of approval of the Law of Strengthening of Public Finances and the strike.
When referring to these figures, the Treasury Chief, Rocío Aguilar, explained that the interest increase on the debt expense is proportional to the fall in revenues (0.44% of GDP), which generates a combined adverse effect of 0, 88% of GDP.
At the end of November, interest reached 3.24% of GDP, some ¢200 billion more than in the same period last year. Therefore, to a large extent, the challenges facing 2019 will be associated with the search for financing options that mitigate the high growth of interest rates in the local market, as well as with the implementation of the reforms of the Strengthening Law to improve controls and increase revenue. From the Treasury we continue working with all available tools, to face these challenges in the best possible way,”
said the minister.
According to the ministry, the policy of containing government spending has produced positive results. One month before the end of 2018, the total expenditure without interest shows the lowest growth rate in the last six years (2.9%). However, current expenditure shows a growth of 7.6% compared to 2017.