BOGOTA, Sept 10 (Reuters) – Colombia’s Congress on Thursday approved the 314 trillion peso ($84.5 billion) spending proposed by the government for its 2021 budget.
The budget, the largest in history, is up 8.3% from the 290 trillion pesos that were approved for 2020 and will be used to re-start the Andean country’s economy, which has been battered by measures to slow the spread of coronavirus.
Congress’s economic committees will now begin discussions for distributing resources among different sectors. Once the committees approve the plans for spending, which cannot be modified, they will be passed on to the lower house of congress and the senate, where they must receive final approval by Oct. 20.
A proposal to raise investment spending by 23.1% to 53.1 trillion pesos in 2021 will be included in these discussions.
The budget is predicated on an economic growth target of 6% for 2021, compared with a forecast contraction of 5.5% in 2020, and uses a fiscal deficit target for 2021 of 5.1% of gross domestic product.
Latin America’s fourth-largest economy has been forced to abandon plans to keep lowering its fiscal deficit, as it had in recent years, amid increased demand for resources during a COVID-19 lockdown.
Colombia is expected to increase its debt load drastically this year and next, risking its credit ratings.
The budget proposal currently includes 185 trillion pesos for government operating costs, 11% more than this year, while proposed debt payments will rise 42% to 75.9 trillion pesos.
Resources allocated for operating costs and paying off debt could decrease if Congress decides to allocate more money to investment spending.
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