After the presentation last Friday of the Medium-Term Fiscal Framework by the Ministry of Finance, the investment bank reacted to the measures to contain the fiscal deficit and compliance with the fiscal rule. Both JPMorgan and Goldman Sachs agree that the government’s fiscal stance is going in the “right direction,” but they do not rule out a new adjustment of additional spending and the issuance of debt in the future if the deficit persists.
In this context, JPMorgan foresees lower revenues, but greater fiscal space for next year, while Goldman Sachs affirms that the change in fiscal guidance is a step in the right direction.
Despite this, the entity also believes that this measure is ‘retrospective’ since the current reduction in spending It almost coincides with the amount by which tax revenue collection is less than its objectives for this year.
“The materialization of some of the tax risks which we highlighted in the past (as a considerable part of tax revenues from uncertain sources) required a reduction in primary spending to avoid resorting to issuing debt to finance the budget under very costly conditions,” expressed Goldman Sachs analysis.
Although it considers that the acceleration of the deficit could be due to specific seasonal factors, tax collection has remained considerably below the objective in the quarter. For its part, JPMorgan recognizes the Government’s efforts to continue with a countercyclical fiscal policy although it considers that the fiscal deficit will continue to be high.
In addition, The entity is contemplating issuances of treasury securities for $60 billion, of which $45 billion would be obtained through auctions and syndications, $13.5 billion from direct placements and $1.5 billion through the issuance of green TES.
Finally, faced with a scenario of insufficiency, Goldman Sachs does not rule out that the Government must make an additional adjustment in spending and debt issuance in case the fiscal deficit does not meet expectations.
#Colombia
