BOGOTA: Colombia will reduce its spending for calendar 2017 by 4 trillion pesos ($1.34 billion) to meet its fiscal goals, President Juan Manuel Santos said on Tuesday, amid a lower-than-expected tax collection and a reduction in the country's credit rating by Standard & Poor's.
The Andean nation is likely to miss its 129.9 trillion peso ($43.65 billion) tax collection target because of disappointing economic expansion, the government has said. The revenue number is considered key to meeting the government's budget deficit target of 3.6 percent of gross domestic product.
Ratings agency Standard & Poor's last week lowered Colombia's long-term foreign currency sovereign credit rating by a notch to BBB-minus, citing the country's weakened policy flexibility.
S&P rated Colombia's outlook as stable, indicating it expects the country's political institutions and economic policies to continue to contribute to economic stability.
"Two days ago I signed a decree reducing the budget by 4 trillion pesos, precisely to comply with the fiscal rule, which the market and multilateral organizations will value. The market is our unrelenting judge," Santos told journalists.
"We have done very important work to keep ourselves inside the fiscal rule, which is what ratings agencies most look at."
Tax collection between October and January was lower than expected and so the spending reduction was needed, the decree said.
The Finance Ministry is expected to present economic targets for 2018 on Thursday.
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