Colombia would be one of the economies least affected by the slowdown of 2023: José Antonio Ocampo

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For the finance minister, one of the effects next year will be lower interest rates

Colombia would be one of the economies least affected by the slowdown of 2023: José Antonio Ocampo

José Antonio Ocampo, Minister of Finance, at the 2022 Economy and Business Forum.

The announcement of global economic recessionby 2023 issued by the International Monetary Fund (IMF) generated uncertainty in all countries, mainly in Colombia, where the tax reform of President Gustavo Petro.

However, the Minister of Finance, José Antonio Ocampo, referred to said matter and stated that the scenario for Colombia is not very bright, but it is not that bad either.

Ocampo affirmed that throughout the world it is expected that there will be a sharp slowdown of the economies and that in the United States and European countries they already speak of recession and in this context of forecasts it is also seen that Latin America will enter a process of deceleration, not a recession.

“In all these forecasts, Colombia comes out relatively well in the sense that the Colombian economy would be a little less affected than others. One looks at the three multilateral entities that have issued growth forecasts for 2023 (IMF, World Bank and ECLAC), and they all say that in Colombia there will be growth above 2%, the best in Latin America for 2023,” he said. The minister at the Forbes Business Forum, held this Wednesday,

However, he specified that there are several points in this slowdown in the world economy that will affect Colombia. The first is that interest rates will go down.

“We are already starting to see it. The public debt securities (TES) had a significant drop in the last month. We hope that as inflation falls worldwide there will be a reduction in international rates, which are key for us, even in terms of government financing,” he noted.

Other , according to Ocampo, is public spending. Regarding this, she referred to the tax reform and the new taxes that it entails.

“When you impose taxes, collect them and spend them, the demand effect is positive, especially if you spend in social sectors. For example, with the tax, the most important profits will be generated from the oil and gas sectors, they will not generate spending. On the other hand, if they are owed with other taxes and spent on social programs, then there will be spending,” he noted.

He highlighted that the oil and gas sectorsthey are in a period of great bonanza and for this reason it is necessary that part of the profit be allocated to social spending, which is an international trend and Europeans are already doing it large scale.

“That established extraordinary tax will tend to go down if prices go down. When there are normal conditions, in our judgment, in three or four years, those extraordinary taxes will no longer be there, ”he noted.

The third point is related to inflation, as analysts expect inflation to drop next year and salaries to rise, which is another positive effect.

Tax reform resources

When asked about the destination of the tax reform resources, Ocampo said that an allocation of resources will be made very similar to the budget addendum presented this year. With this, then, the magnitude of the programs would be expanded.

“This year, the sector that benefited the most was the agricultural sector, which will give more support to the peasant sector. In addition, for this sector comes the agrarian reform, in which tertiary roads and the Mi Casa Ya program must be executed. In the debate we have on agrarian reform, emphasis is always placed on these two programs. If the peasants are to be given land, they must be offered lines of credit, marketing opportunities, among other things”, he stressed.