BOGOTA (Reuters) - Colombia proposed reallocating about $1.5 billion (3 trillion pesos) in its 2015 budget plan for infrastructure and social spending, Finance Minister Mauricio Cardenas said on Wednesday.
The amount had been earmarked for public administration and debt servicing costs under the government’s original 216.2 trillion peso budget. But Cardenas said the funds would be shifted to the investment portion of the budget, which includes spending on education, housing and roadways.
His comments to reporters outside Congress come as the government has fallen under criticism for a proposed tax reform, aimed at plugging a 12.5 trillion peso financing gap, that some say would hurt the middle class and businesses.
“To be faithful to promises made during the campaign, we will increase social investment,” Cardenas said, referring to pledges made during President Juan Manuel Santos’ successful re-election bid in June.
The investment portion of the budget would increase to 49.2 trillion pesos from the original 46.2 trillion pesos planned for next year, Cardenas said.
Cardenas is seeking congressional approval to extend two taxes that had been scheduled to expire at the end of this year - a wealth tax on assets over 1 billion pesos and a levy on bank transactions.
The plan earlier this month drew heavy criticism by prominent industry figures who said it threatened investment, employment and consumer spending.
Cardenas had said that there would be an “austerity” plan aimed at finding efficiencies in the running of the government but no overall reduction in the size of the budget.
Finances have become a concern after a decline this year in crude output - the nation’s biggest export - cut earnings from royalties that flow into the $370 billion economy.
Colombia has pinned its economic growth prospects on a major overhaul of inadequate roadways and construction of new houses. Trucks carrying oil and manufacturing goods take days to crisscross the mountainous nation.
The budget must be approved by Congress before the end of October and any tax reforms have to be passed before mid-December.
Economic growth slowed in the second quarter to 4.3 percent from 4.5 percent a year ago. It shrank from the previous quarter, when annual growth was a strong 6.4 percent.
Full-year growth is expected to reach 4.7 percent.
Reporting by Carlos Vargas; Writing by Helen Murphy; Editing by Tom Brown and Cynthia Osterman