Colombia fiscal deficit reached 6% of GDP in first nine months of 2020

BOGOTA: Colombia's central government deficit was 6% of gross domestic product in the first nine months of 2020, more than five times the figure recorded in the same period the year before as spending increased due to the coronavirus pandemic, a Finance Ministry document showed on Wednesday.

From January to September 2019, the deficit was 1.2% of GDP.

Latin America's fourth-largest economy saw a 20.7% increase in spending and a reduction of 13.3% in income during the first nine months of last year.

"The reduction in tax collection, as well as the expansion of spending to attend to the emergency, are as much a consequence of the slowing down of national production as of government isolation and confinement measures," a ministry document seen by Reuters said.

Gross debt from January to September 2020 was 65.6% of GDP, more than the 50.3% recorded in the same period in 2019.

The government has widened its fiscal deficit target to 8.9% of GDP for all of 2020 because of the pandemic, amid predictions the economy will have contracted 6.8%.

In 2021, the government estimates the economy will grow 5% and the fiscal deficit will be 7.6% of GDP.

President Ivan Duque's administration plans to propose a tax reform meant to increase income.