BOGOTA (Reuters) - Colombia’s government will back a reduction of between 7.5 and 10 percent in “general spending” in 2019, the finance ministry said on Wednesday, in a bid to make up a $8.2 billion shortfall in funding for essential social programs in next year’s budget.
The cuts will include goods and services acquisitions, maintenance and hiring, the ministry said in a statement. Those funds will be needed for education, health and other social programs, it said.
The peso value of the cuts will be between 800 billion and 1 trillion pesos, a finance ministry source said.
Finance Minister Alberto Carrasquilla said in a statement that the budget puts the country at the limit of its so-called fiscal rule, which establishes a deficit target of 2.4 percent of gross domestic product for 2019.
Budget proposals must be submitted before July 20 of each year, so President Ivan Duque’s new government, which took office on Aug. 7, cannot modify the proposed total value of 259 trillion Colombian pesos ($83.7 billion).
The government can, however, get congressional approval to make cutbacks in some areas to fund a shortfall. The spending reduction proposal will be included in the budget bill and debated in Congress.
Carrasquilla has said Colombia’s economic situation is worrying. The Duque government is expected to shortly present a tax overhaul meant to steady the economy, but critics say plans to increase duties on individuals while reducing them on companies are unfair.
Reporting by Nelson Bocanegra and Carlos Vargas; Writing by Julia Symmes Cobb,; Editing by Rosalba O'Brien and Alistair Bell