Colombia 2015 budget deficit likely to widen from goal

BOGOTA: Colombia's central government deficit will probably be around 3 percent of gross domestic product this year, deeper than a 2.8 percent target, Finance Minister Mauricio Cardenas said on Thursday, reinforcing analyst expectations the government will borrow more.

Tax revenue is expected to be lower than the official target this year at around 116.8 trillion pesos ($46.3 billion) instead of 123.9 trillion pesos, Cardenas said, as lower oil prices hit tax and royalty income on crude exports.

The Andean country's government expects slower growth this year of between 3.5 and 4 percent, versus a 4.6 percent expansion last year, mainly due to lower prices of oil, its top export. It will reveal the first quarter growth figure on Friday.

"(Three percent) is the deficit permitted by the fiscal rule in an economy with an oil price below the long-term trend and which is growing below its potential," Cardenas told reporters, adding a deeper deficit was normal in these conditions.

The government will also make known its medium term financial plan which is likely to make adjustments to some targets and outline goals for 2016. Analysts say tighter finances will force the government to swap existing debt for later-expiring securities and top up its coffers with new bond sales in the coming months.

A breakdown of the fiscal deficit given in Cardenas' presentation at an economic forum in Bogota showed more than two thirds of it was structural and nearly a third caused by slower growth and lower oil prices.

Analysts have a more pessimistic outlook for growth this year than the government, forecasting an expansion of 2.5 to 3.5 percent.

Colombia produces around 1 million barrels of crude a day and is also the world's fourth-biggest coal exporter.

Central bank board member Ana Fernanda Maiguashca told reporters at a separate seminar in the city of Cali that the slowdown was healthy given a more somber external scenario that has cut export demand.

"It's not a crisis scenario. We will probably continue to be one of the fastest growing economies in the region, but there is an external reality that we have to recognize and adapt to," she said.