UPDATE 3-Colombia keeps deficit goals despite heavy rains

* Government maintains fiscal targets for 2011

* Covering flood reconstruction with Ecopetrol, taxes

* Colombia sees growth of around 4.5 pct this year (Updates throughout)

By Jack Kimball

BOGOTA, Jan 12 (Reuters) - Colombia is sticking to its pledged budget deficit goals in 2011, even while the Andean nation grapples with the added burden of devastating floods, Finance Minister Juan Carlos Echeverry said on Wednesday.

Heavy downpours and floods, which began last year, have killed more than 300 people and caused up to $5.2 billion in damages, pressuring President Juan Manuel Santos as he seeks to tackle the deficit and regain Colombia's investment grade.

But Echeverry said Colombia would issue no new debt to finance reconstruction, opting instead for more taxes and selling shares in Ecopetrol, which is 89.9 percent owned by Colombia, Latin America's No. 4 oil producer.

"The message is basically what? We will not use debt for paying for reconstruction," the minister told investors in a conference call. "We are keeping the same fiscal numbers ... we will not change the debt."

Echeverry said the government plans to generate around $2.2 billion this year in additional financing mostly through tax modifications and the sale of up to 2 percent of shares of state oil company Ecopetrol ECO.CN(EC.N).

Colombia, whose coal and coffee production have been disrupted by the flooding, still sees gross domestic product growth of around 4.5 percent this year and an expected economic expansion in 2010 of around 4.3 percent.

Despite the rains, Colombia's 2011 goal is a consolidated fiscal deficit of 3.4 percent of GDP and a central government deficit of 4.1 percent of GDP, compared with a consolidated deficit for 2010 of 3.6 percent and a central government deficit of 4.4 percent.

The minister said the government could use the sale of 5 percent to 7 percent of Ecopetrol through 2014 to generate an estimated 8 trillion to 10 trillion pesos, or $4.3 billion to $5.3 billion, mostly for infrastructure costs.

Ecopetrol sold 10.1 percent of its shares in 2007 and has already authorized an additional sale of 9.9 percent of its shares to recapitalize. A government decree allows the sale of up to another 10 percent for reconstruction. [ID:nN1777050]

Echeverry said Bogota's sale of Ecopetrol shares would aim to minimize its impact on the peso currency COP=RR.

"This year we might not try to sell more than probably one percent. That's not written in stone. We might sell more or we might sell nothing, but let's say maximum one to two percent," Echeverry said.

As part of emergency measures after the rains, the government has announced it would raise around $2.6 billion in additional revenue over the next four years by changing tax regulations. [ID:nN29288951] [ID:nN11163913]

The government has created a 2011-2014 fund of 6.3 trillion pesos to be financed by a wealth tax generating 3.3 trillion; a tax on financial transactions for 2 trillion and another 1 trillion pesos passed over from last year's budget.

Santos, who came to office in August, has introduced reforms to tackle the stubborn fiscal deficit, including adjustments to the country's oil and mining royalties and a new fiscal rule. Investors see the reforms as key to Colombia restoring its investment grade with credit rating agencies.

Standard and Poor's on Tuesday said it could soon decide whether to grant Colombia its much-awaited investment grade. The Andean country stands at BB-plus for foreign currency bonds or one notch below investment grade. [ID:nN11155531] ($1=1,856.79 Colombian pesos) (Writing by Patrick Markey; Editing by W Simon )