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JP Morgan Expect Government To Trim Expenditures By ~1% Of GDP

COLOMBIA
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  • JP Morgan note that the fiscal situation has deteriorated markedly in Colombia, likely quicker than what they had envisioned. Real tax revenues fell by 45% y/y in April, marking a 16.6% contraction YTD, driven by a plunge in income tax and VAT on imports.
  • Hacienda also reported the fiscal data for Q1, which revealed a primary deficit of 0.3% of GDP YTD. This left the primary deficit 0.5% of GDP wider YTD, compared to the primary surplus reported in the first three months of 2023. Including interest payments, the headline fiscal deficit widened to 1.2% of GDP YTD, widening from a 0.9% of GDP shortfall in the same period of 2023. On a last 12-month basis, the headline deficit came in at 4.6% of GDP.
  • Against the material deviation of revenues from what was entertained in the Financial Plan, JPM expect the administration to trim expenditures by a bit more than 1% of GDP while unveiling the multi-year fiscal framework in mid-June. The fiscal authorities have also signalled the intention to amend the fiscal rule, apparently not to change it for the current year, but to avoid the commitment to a 0.5% of GDP structural primary surplus for next year.
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  • JP Morgan note that the fiscal situation has deteriorated markedly in Colombia, likely quicker than what they had envisioned. Real tax revenues fell by 45% y/y in April, marking a 16.6% contraction YTD, driven by a plunge in income tax and VAT on imports.
  • Hacienda also reported the fiscal data for Q1, which revealed a primary deficit of 0.3% of GDP YTD. This left the primary deficit 0.5% of GDP wider YTD, compared to the primary surplus reported in the first three months of 2023. Including interest payments, the headline fiscal deficit widened to 1.2% of GDP YTD, widening from a 0.9% of GDP shortfall in the same period of 2023. On a last 12-month basis, the headline deficit came in at 4.6% of GDP.
  • Against the material deviation of revenues from what was entertained in the Financial Plan, JPM expect the administration to trim expenditures by a bit more than 1% of GDP while unveiling the multi-year fiscal framework in mid-June. The fiscal authorities have also signalled the intention to amend the fiscal rule, apparently not to change it for the current year, but to avoid the commitment to a 0.5% of GDP structural primary surplus for next year.