Weekly Report - 26 February 2015 (WR-15-08)

COLOMBIA | Facing up to the inevitable, budget cuts ordered. Colombia will delay expenditures worth US$2.44bn, roughly 3% of the approved US$88bn 2015 national budget, because of the sharp fall in forecast oil revenues this year. The cuts fall mostly on the investment side, with a reduction of US$1.95bn in planned outlays, including much-needed infrastructure improvements, taking total planned investment down to US$18bn in 2015. Another US$488m will be shaved off administrative costs.
In a statement, the government said the decision was based on “new macroeconomic and fiscal conditions, associated primarily with the fall in international oil prices”. It stressed that spending on the most vulnerable citizens, including those displaced by the country’s internal conflict, would be ringfenced. Colombia’s fiscal income (including taxes and royalty revenues) has been hit hard by the 60% fall in global crude prices since June 2014. Oil is the country’s biggest export and source of foreign exchange.