Tax and public expenditure trends Colombia: Lessons for the new administration of 2022-2026

Sergio Clavijo ()

No 20534, Documentos CEDE from Universidad de los Andes, Facultad de Economía, CEDE

Abstract: This document examines the macro-economic performance of Colombia before pandemic (2015-2019) and then assess prospects over 2020-2024, with particular emphasis on fiscal stabilization. We first provide a long-term view and extract some of the fiscal characteristic of Colombia such as: i) directional persistence in tax and spending adjustments; and ii) searching for modular effect (building-blocks), given a complex "political-economy" that hair-cuts the proposed ambitious reforms. Then we turn to carry-out some public finance simulations regarding the required fiscal balance stemming from additional social expenditure and tax revenue efforts. By highlighting public expenditure rigidities, associated mainly with decentralization andmounting pressure for additional social expenditure, we also discuss prospects of the new Fiscal Rule (under Law 2155 of 2021) focusing on anchors related to debt-ratio targets and primary balance requirements. We conclude with some recommendations regarding a "political economy" strategy in order to pursue several structural reforms under the new Administration of 2022-2026, where computing a so-called "Social Betas" could help in setting priorities.

Keywords: Taxes; Public Goods; Public Debt; Latin America. (search for similar items in EconPapers)
JEL-codes: H2 H44 H63 O54 (search for similar items in EconPapers)
Pages: 32
Date: 2022-11-09
New Economics Papers: this item is included in nep-pbe and nep-pub
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Persistent link: https://EconPapers.repec.org/RePEc:col:000089:020534

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