Notes on the Fiscal Results for the year 2.024 in Colombia.

The fiscal economic results for the year 2.024 were released by the official fiscal authority in charge of their preparation. These are the fiscal deficit and the public debt for which they had basic information such as inflation, the peso dollar exchange rate and the GDP, among others.

For the year 2.024, inflation was 5.2%, the peso dollar exchange rate 4.073 and the estimated GDP 1.8%. Of these, inflation showed a decrease since in 2.023 it was 9.28%, the exchange rate also decreased from 4.328 and the GDP grew since it was 0.6% in 2.023.

The fiscal authority's projections for the year 2.025 indicate that inflation will fall to 3.6%, the exchange rate will rise to 4.360 and the GDP will increase to 2.6%.

Regarding the fiscal deficit for the year 2.024, the result obtained was -6.8% of the GDP, higher than that of the year 2.023 of -4.3% and for the year 2.025 it projects -5.1%.

For its part, the net public debt reached 60% of the GDP in 2.024, with an increase compared to that of 2.023 which was 53.8% and for the year 2.025 it projects 60.6%.

Some observations from the above are the following. Inflation, although it has stagnated in the last three months, continues to decline, but for the end of this year there are other forecasts apart from the official one that place it at 4.1%, such as that of the Central Bank, and other analysts and think tanks also believe it will be around 4%.

All inflation estimates for 2.025 were recalculated upwards after the january result of 5.22%, which surprised several analysts who expected a decrease. On the contrary, those who expected it to remain the same or slightly higher than december argued the effect of the increase in the minimum wage, also of transportation, private health education, some services and rents. There was uncertainty about food, but in january they finally showed low price growth.

Another result that had been observed since previous months is the increase in the fiscal deficit, which went from -4.3% of GDP in 2.023 to -6.8% in 2.024. This increase in the deficit was reflected in the fall in tax revenues throughout 2.024, which finally fell from 16.7% of GDP in 2.023 to just 14.5%. Furthermore, public spending did not decrease but increased from 23.1% of GDP in 2.023 to 23.4%.

However, the official fiscal authority considers that for 2.025 the fiscal deficit will fall to -5.1% of GDP, since tax revenues will rise to 16.8% of GDP and public spending will only rise slightly to 23.5% of GDP.

Regarding tax revenues in relation to GDP, it should be noted that according to official fiscal sources, an atypical situation was observed in that although GDP grew from 0.6% to 1.8% from 2.023 to 2.024, the same did not happen with tax revenues, which implies that they are not structural causes but rather cyclical causes (therefore the fiscal rule is being complied with) that explain the decrease in said revenues and that, on the contrary, for the year 2.025 tax revenues will grow as mentioned before, which is structurally expected with the increase in GDP that year to 2.6% from 1.8% in 2.024.

With the results of the fiscal deficit of the last three years, especially the increase in 2.024 versus 2.023, the public debt rose from 53.8% of GDP in 2.023 to 60% of GDP in 2.024 and they expect a result of 60.6% for 2025.

Inflation

As mentioned before with the results of the last three months and especially of january, inflation for this year is unlikely to fall below 4%, of course the downward trend continues from 5.22% in january and in February and the following months there will be declines, but these falls will have less dynamic than expected back in october or november last year, in this way the monetary authority's inflation target of 3% is likely to be reached already in 2.026 and by the end of this year it will be around 4%.