MNI China Daily Summary: Wednesday, October 16

MNI: ITALY FINAL HICP +1.2% M/M, +0.7%Y/Y

MNI BRIEF: BOJ's Adachi Sees Conditions For Normalisation

MNI: PBOC Net Injects CNY581.4 Bln via OMO Wednesday

CHINA PBOC CONDUCTS CNY642.4 BLN VIA 7-DAY REVERSE REPOS WEDS

MNI: PBOC Sets Yuan Parity Higher At 7.1191 Weds; +2.66% Y/Y

EZ/UK Bond Supply Calendar: Spain, France Auction on Thursday

MNI: US SEP IMPORT PRICES -0.4%

MNI: CANADIAN AUG MANUFACTURING SALES -1.3% MOM

CANADA: Politics Week: Trudeau Faces More Pressure To Resign

CANADA: Politics Week: Parliament Opens With Early Election Threats

AUSTRALIA: Albanese Lines Up Budget for May Election

© 1982-2024 MNI. All rights reserved.
Terms | Privacy
Log Out
Free Trial

COLOMBIA: JP Morgan Believes Further Spending Cut Needed To Meet Fiscal Rule

COLOMBIA
BulletEM BulletEmerging Market News
  • After the primary deficit came in at 0.9% of GDP through H1, JP Morgan estimates that primary spending adjusted lower in Q3, amid notable budget under-execution. Budget execution (excluding debt service) reached only 54.2% through September, amid continued capex underperformance, well below the historical average.
  • However, revenues continue to contract, with JPM estimating a decline of 1.9% of GDP through Q3, when compared to the same period of 2023. As a result, the accumulated primary fiscal deficit through Q3 would have stood at 0.6% of GDP, on their estimates, 0.3%-points below the limit imposed by the fiscal rule. Going forward, however, JPM believes that unless budget execution continues widely underperforming in Q4, Hacienda will have to unveil a new fiscal spending cut in order to comply with the fiscal rule.
  • For next year, the 2025 Budget (likely to be passed by decree) is projecting a narrower 0.1% of GDP primary fiscal deficit, consistent with a headline fiscal deficit of 4.7% of GDP, driven by higher expected tax collection. JPM maintains reservations in the ability of the government to meet this target and expects fiscal risks to continue exerting pressure on investments premia ahead.
191 words

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
  • After the primary deficit came in at 0.9% of GDP through H1, JP Morgan estimates that primary spending adjusted lower in Q3, amid notable budget under-execution. Budget execution (excluding debt service) reached only 54.2% through September, amid continued capex underperformance, well below the historical average.
  • However, revenues continue to contract, with JPM estimating a decline of 1.9% of GDP through Q3, when compared to the same period of 2023. As a result, the accumulated primary fiscal deficit through Q3 would have stood at 0.6% of GDP, on their estimates, 0.3%-points below the limit imposed by the fiscal rule. Going forward, however, JPM believes that unless budget execution continues widely underperforming in Q4, Hacienda will have to unveil a new fiscal spending cut in order to comply with the fiscal rule.
  • For next year, the 2025 Budget (likely to be passed by decree) is projecting a narrower 0.1% of GDP primary fiscal deficit, consistent with a headline fiscal deficit of 4.7% of GDP, driven by higher expected tax collection. JPM maintains reservations in the ability of the government to meet this target and expects fiscal risks to continue exerting pressure on investments premia ahead.