[Economics] "Economy is showing that the reactivation is underway," says Minhacienda

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Interview with the Minister of Finance, José Manuel Restrepo, who assumed the portfolio in May and highlights positive figures for the country

Colprensa
Colombia managed in 2021 to overcome the worst economic shock in the country's history, after the ravages left by the Covid-19 pandemic last year, and register very positive figures that are comforting in the midst of the reactivation that is advancing steadily.

This is the view of the Minister of Finance, José Manuel Restrepo, who assumed control of the portfolio in May of this year, in the midst of a social outbreak due to the failed tax reform, and who managed to carry out what today we know as the Law of Social investment.

The senior official highlighted the achievements of this tax reform that managed to emerge and highlighted the good moment that the country's economy is going through, being highlighted at the international level as one of the most resilient to the pandemic.

This year it was projected that a gradual reactivation of the economy will begin in the midst of all the challenges that the pandemic left us. Were the results we are seeing expected?

After having faced the worst shock in the economic history of our country, after having seen how the fiscal deficit, the public debt, the levels of poverty, inequality and unemployment increased, this year we closed with very important advances of in the face of an economic reactivation, which is the result and effort of the National Government in the commitment to meet basic needs and social purposes, and a great effort of resilience of the national enterprise. Today we can say that Colombia is the third fastest growing economy among the OECD countries, but it is also the economy that, according to The Economist, is the most advanced in the recovery of the world.

 

What balance does the Government make of the behavior of the economy during 2021?

It is an economy that is growing at 9.7%, almost in the past double digits, the best result in 115 years, which is not only doing so against the year but against 2019, before the pandemic, and has recovered the job it lost in the pandemic, almost 5 million jobs recovered. It has also been making a fiscal effort, to the point that we have reduced deficit and public debt pressures by one percentage point in the deficit, that is, 11 trillion pesos, and 3 percentage points in the public debt of GDP, which It means that the gradual orderly adjustment of public finances is being more accelerated than expected, then it means that it is an economy that is showing that the reactivation is underway and it is a priority for this and next year to overcome the difficulties that it left us. the pandemic.

Of all the economic indicators, were the results the ones that presented the best performance at the end of the year?

 

It is an economy that is showing that the reactivation is underway
Without a doubt the growth, the best result in 115 years. In the second place, I would highlight the employment recovery indicator of 85%, it is a very important result, despite the fact that we are still with unemployment above what we had before the pandemic, but 2022 is the year where the purpose is reach the level of employment we had before the pandemic or even lower.

Another indicator has to do with extreme and monetary poverty. With the social programs of the Social Investment Law, the idea is to return to the levels we had before the pandemic, to make up for lost time; Also in fiscal deficit and level of public debt we will be better than we had anticipated in the medium-term fiscal framework, which is significant, because it is a demonstration that the adjustment of public finances is being positively accelerated, those are as the indicators that will be in the best result compared to what we had planned.

How much is this recovery of the fiscal deficit in the midst of the reactivation that Colombia has been doing?

 

We lowered our forecast from 8.6% of GDP to 7.6%, that represents one percentage point, which is worth 11 billion pesos of improvement. In terms of growth we had forecast 6%, then we raised it to 8.5% and finally we left it at 9.7%, which clearly shows that Colombia is going to grow much more than expected and in public debt it is 3 percentage points , an important reduction, because they are between 30 and 40 trillion pesos of less value, the result of the reactivation, the austerity in public spending, the fight against tax evasion and an improvement in collection by the Dian aa through the modernization of the entity.

These factors are directly related to the Social Investment Law. How is that implementation going?

The law had three purposes and the heart was set on the social. Today the zero enrollment for higher education already operates, 719,000 young people have zero enrollment this semester and who represent 97% of the official enrollment of public institutions; second, the solidarity income, we have turned 7 billion pesos this year and we are going to grow from 3 million homes to 4 million homes; third, in employment incentives since the law, 194,000 jobs have been created, most of them between 18 and 28 years of age, but an equally important number for adults, including women over 40 years of age; fourth, the payroll subsidy, in just months it has protected 300,000 jobs in micro and small businesses, but added to what we had before the law are 4.5 million people whose jobs have been protected. This means that it has paid off and we are preparing for next year, where there are almost 29 million Colombians who are going to benefit.

 

And in terms of fiscal sustainability and reactivation?

In the first, we are already demonstrating it, the fiscal deficit was reduced, the level of public debt against GDP was reduced and the fiscal rule was implemented again, and the decrees were issued to create the new committee with technical and operational autonomy. the decrees of the criteria established in the new fiscal rule were issued; and in the face of the reactivation I believe that the figures speak for themselves. The social investment law is showing important results and it is also doing so in the collection, the collection is growing about 22% compared to last year and the collection and fight against tax evasion has already exceeded the goals we had for this year.

What are the projections that the National Government has for the economy in 2022?

We project a minimum growth of 4.2%, the OECD speaks of Colombia growing at 5.5% and being the second fastest growing country in the organization and the first in Latin America. What is significant is that compared to a year in which we grew almost 10%, it is very important to grow above 4.3%, but it is more important than when one reviews that estimated growth for 2022, added to the growth estimated for 2021, it would allow Colombia reaches in 2022 the level of Gross Domestic Product that Colombia would have had if it had followed the same path before the growth pandemic. This is very important, because it is returning to a level of GDP as if there had been no pandemic, that shows a very powerful reactivation.

 

What sectors do you foresee that will stand out and will continue to drive the economic growth of the country?

The sectors that are driving growth this year will surely also be the protagonists next year, such as internal trade, a highly employment-generating sector, a very important sector in the regions, in micro and small enterprises. Also the industrial sector, which is important from the point of view of generating employment and contributing to the productive dynamics of the country. The other that is drawing attention to are restaurants, accommodation and entertainment, which were sectors very hit in the pandemic. Another that grows very well is what is called activities or public activity, the counter-cyclical policy of having a very generous budget for 2021 and much more generous in 2022 will allow us to attend the reactivation and contribute to growth.

We believe that additional protagonists for next year are housing, because we are seeing the best figures in VIS and No Vis housing sales, and also infrastructure, because the fourth generation program is advancing very quickly and we have just announced that in the fifth generation program We gave financial or risk guarantee to nine projects for 23 trillion pesos, this will be a very important trigger for the generation of employment and GDP growth in the sector.

They foresee any risk that may occur so that this growth slows down ...

 

The most important challenge is the new variables of the covid, the Ómicron is one of the great challenges and the only possible response is an invitation to all Colombians to get vaccinated, to take advantage of the government's public policy of investing in vaccination, to allow the third dose, that Colombia is one of the nations that advances rapidly in the world, that we participate with vaccination to face these new variables of covid-19.

Are more resources being allocated to the acquisition of new vaccines against Covid-19?

We have made very important investments and we continue to make them so that vaccination allows Colombians to have access to the third dose, we already allow it for people over 18 years of age and it is important that we make use of this public policy, because it is the only way to avoid the impact of these new variants in Colombia.

Is there optimism in the Government regarding the remainder of the administration in economic matters?

There is commitment, there is work and there is responsibility to understand that it is not only to grow, but to grow with a social sense, that is, to generate employment, serving the most vulnerable, through programs such as Ingreso Solidarios; and commitment to youth in meeting their most felt needs such as employment and access to higher education for free. So, I believe that there is a great commitment that growth is tied to substantive advances on the social front and that we work together so that the country advances, that fills us with optimism.

 

Link: https://www.larepublica.co/economia/economia-esta-demostrando-que-la-reactivacion-esta-en-marcha-dice-minhacienda-3282826