Debt and Deficits:ColombiaÂ´s Unsustainable Fiscal Mix
MarÃa AngÃ©lica ArbelÃ¡ez Restrepo (),
Ulpiano Ayala Oramas () and
James Poterba ()
Authors registered in the RePEc Author Service: Maria Angelica Arbelaez ()
Informes de InvestigaciÃ³n from Fedesarrollo
This paper presents an overview of recent fiscal history in Colombia, and it projects the future course of fiscal deficits and the debt-to-GDP ratio under several different budgetary scenarios. Our projections, which are based on the macroeconomic and fiscal models developed at the Ministry of Finance and Public Credit, suggest that the current path of fiscal policy is not sustainable. Substantial increases in the governmentÂ´s fiscal surplus are needed in order to return to a regime in which the debt-to-GDP ratio will stabilize in several decades. Our base case analysis suggests that stabilizing the debt-to-GDP ratio at 45 percent by the year 2030 would require a 1.8 percent of GDP reduction in the fiscal deficit, effective immediately. This assumes that the social security reforms introduced in the last Congress are enacted. If they are not, the required adjustment in the fiscal deficit is several percentage points greater.
Keywords: Deuda PÃºblica; PolÃtica Fiscal (search for similar items in EconPapers)
JEL-codes: H3 H63 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:col:000124:002250
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