Prestigious bank in the world lowered its recommendation to invest in Colombia, why?

Prestigious bank in the world lowered its recommendation to invest in Colombia, why?
Prestigious bank in the world lowered its recommendation to invest in Colombia, why?

10:32 AM

Bank of America, one of the most recognized financial institutions in the world, reclassified Colombia’s external debt into a higher risk category. The bank argued that there are fiscal risks in the country.

The action of the prestigious bank It is because he believes that there is a possibility that the Congress of the Republic will approve a flexibility in the fiscal rule, as proposed by the National Government.

Also read: National Government insists on its idea of ​​making the fiscal rule more flexible and would present a bill in Congress

The entity added in a statement: “Congress can agree to relax the fiscal rule to allow public spending to continue flowing.”

In fact, Bank of America believes that The risks are biased to the downside before the presentation of the medium-term fiscal framework, which will be this June 14. In the bank’s opinion, investors are underestimating the risk of the Government modifying fiscal objectives. In fact, the bank recommended investors sell the Colombian assets.

The idea of ​​lowering the fiscal rule is not new; President Gustavo has even referred to the situation on several occasions, as has his Minister of Finance. The Executive argues that it is the best formula to reactivate the economy in times of deceleration.

The truth is that this proposal It makes investors nervous. In the eyes of the market It is seen as a message of legal insecurity for State lenders, and even risk rating agencies are very attentive to its compliance.

This because the tax rule and the medium-term fiscal framework They establish limitations on what you can do with the State’s public money. It is simple words: it is a way to put the accounts in order and guarantee that the money that comes in through taxes, dividends and returns will be effectively used in the payment of the debt, the functioning of the State and social spending. Thus protecting public money.

#Colombia

 
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