June 11, 2019 / 1:34 PM / 2 months ago

Colombia to maintain original fiscal targets for 2019 and 2020 -Finmin

BOGOTA, June 11 (Reuters) - Colombia will keep its original fiscal targets for this year and next, even though it was permitted to relax them by the fiscal-rule committee due to the strain on the economy from a flood of Venezuelan migrants into the Andean nation, the finance minister told Reuters.

It will keep to its central government deficit target of 2.4 percent of GDP for 2019 and 2.2 percent of GDP for 2020, Alberto Carrasquilla said in an interview late on Monday.

In March, the Fiscal Rule Advisory Committee allowed deficits to be widened in 2019 to 2.7 percent of GDP and in 2020 to 2.3 percent of GDP, due to the heavy impact on the economy of 1.3 million Venezuelan migrants.

The committee is an independent body charged with overseeing implementation of the so-call fiscal rule, which seeks annual limits on the deficit.

Carrasquilla said the larger deficit allowed by the committee this year - equivalent to an additional 3 billion pesos ($921 million) - would not be used until the full impact of the Venezuelans living in Colombia is determined.

“As long as we don’t see the fiscal effects derived from the Venezuelan migration - which is the reason the committee said it was a fiscally temporary, transitory disturbance - we’re not going to use it,” Carrasquilla said.

He will reveal broader financial targets on Thursday.

Carrasquilla also maintained the economic growth goal for this year at 3.6 percent, with a bullish bias, even though first-quarter expansion came in less than expected.

He projected economic growth of 4 percent for 2020 and addressed recent criticism by economists about the state of the economy, saying he was not content with the expansion.

“I’m not at ease with the economy growing at the 3.6 percent we have projected for the year. We came from a very difficult period when the economy bottomed out roughly in 2016 or 2017 and since then it’s been bouncing at a pace that’s less good than we would have liked, but it’s been bouncing.”

Carrasquilla said that he expected credit ratings agencies to keep their investment grade ratings in the coming years, even though there have been some fiscal warnings made.

“I believe we’re going to stabilize and we’re going to lower the levels of debt over GDP in the medium-term horizon,” he said.

“Colombia is a country that always honors its obligations and will continue to be so, that’s in our DNA.” (Writing by Helen Murphy Editing by Nick Zieminski)

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