BOGOTA, Aug 27 (Reuters) - Colombia may have difficulty financing its 2020 budget needs if the economy expands below the government’s target next year, central bank board chief Juan Jose Echavarria said on Tuesday.
The Andean country’s government has set 4% as its gross domestic product expansion target for next year, a figure well above the 3.2% to 3.3% anticipated by the bank, which says external demand will be weakened by global deceleration and the trade war between the United States and China.
“Economic growth that is below the government’s projections could create problems for reaching the tax collection goal and therefore the financing of the 2020 budget,” Echavarria told economic committees from the upper and lower houses of Congress.
Volatility in oil prices, the privatization of state-owned businesses and a new electronic receipt system for tax payments could also affect government finances, Echavarria added.
“It is important to underline the efforts that have been made to meet the deficit targets, however, these efforts have not translated to lower levels of public debt, partly because of negative shocks that have hit the economy, which have affected the exchange rate,” Echavarria said.
In July the bank cut its growth projection for this year to 3% from 3.5% previously, placing it far below the government’s 3.6% expansion target.
The government has said it will need to raise some 8 trillion pesos to its proposed 2020 budget, which is currently wending its way through Congress. (Reporting by Nelson Bocanegra, additional reporting by Carlos Vargas Writing by Julia Symmes Cobb; Editing by David Gregorio)