BOGOTA, May 8 (Reuters) - The committee that advises Colombia on its deficit has relaxed targets for the figure for the next eight years, because of lower economic growth potential and lower projected crude oil prices, a document from the finance ministry showed.
The consulting committee helps the government evaluate the viability of the so-called fiscal rule - the central government’s deficit target. The new revisions may allow the country to meet the deficit goals, which is key to safeguarding investor confidence amid concerns about growth.
The allowed deficit for 2019 was eased to 2.4 percent of gross domestic product (GDP) from 2.2 percent, a document published on the ministry’s website late on Monday said.
The group also relaxed the 2020 target - to 2.2 percent of GDP from 1.6 percent.
“Because the economy is below its potential level, government income will be inferior,” the document said.
The government has an economic growth target of 2.7 percent this year, well below the economy’s estimated growth potential of 3.5 percent.
The committee’s revisions could be incorporated into mid-year changes to the government’s fiscal targets, set for June.
The committee also modified its estimate for when the deficit will reach 1 percent to 2027. That deficit level had previously been predicted for 2022.
“The convergence of the total deficit to the target of 1 percent will be more gradual than the path determined in 2017,” the document said.
The committee maintained deficit projections of 3.1 percent of GDP for this year and 1 percent for 2027, but relaxed projections for 2019, 2020, 2021, 2022, 2023, 2024, 2025 and 2026. (Reporting by Nelson Bocanegra Writing by Julia Symmes Cobb Editing by Marguerita Choy)