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Increase in the price of gasoline could be for more than 200 pesos per month in 2023

Gas station in Bogotá (Colprensa - Álvaro Tavera)
Gas station in Bogotá (Colprensa – Álvaro Tavera)

The National Government intends to stabilize the fiscal deficit at more than three percentage points by 2024, “the strongest in the history of Colombia,” according to the Minister of Finance, José Antonio Ocampo. Doing so will imply accelerating the stabilization of fuel prices, which will lead to a further increase in gasoline prices over the next year.

The announcement was made by Minister Ocampo in the forum The truth about the Tax Reform, organized by the Colombian Academy of Exact Sciences. In his speech, the official stressed that the previous government did not carry out the fiscal adjustment and left the difficult task to the incoming Administration of Gustavo Petro.

“The (previous) government decided not to pass it on to consumers and leaves us with the challenge of a deficit in the fuel price stabilization fund,” Ocampo said. “The FEPC deficit is 2.5% of GDP, 39 billion pesos this year. The idea is to reduce it gradually, which is paying from the national budget, but at the same time going to the task of increasing gasoline prices, first; much more gradually the ACPM due to the impact it has on the cost of transporting goods, trucks and buses”, said the minister.

This increase has an impact on the transport of merchandise, so in a context of inflation as the country lives, according to the presentation of the Minister of Finance, work is being done on a pragmatic plan with gradual and increasing increases in fuel prices. for the next few months.

Policy to reduce the FEPC deficit in Colombia
Policy to reduce the FEPC deficit in Colombia

“This year we started with 200 pesos per gallon of gasoline per month, and next year we hope to accelerate those increases,” Ocampo said. In other words, the increase per month could be higher, to finally achieve stabilization by 2024.

“We have to move that to a manageable fiscal deficit. Next year we are going to reduce GDP from 7.0 to 4.3 percent and in 2024 we already expect to have a moderate deficit (-1.7),” said the Finance Minister, who acknowledged that it is not an easy task.

“If one thinks about the task that was to approve a tax reform of 20 trillion pesos, then to think that only the FEPC has a 19 trillion pesos deficit next year, is equal to the tax reform. In other words, it is a huge deficit that burdens significantly. The only way to reduce it is to allocate tax resources to those or increase fuel prices. None of the decisions is pleasant,” Ocampo said.

As he explained, allocating the resources generated by Ecopetrol implies that this money cannot go to social spending. For this year there are resources for 19 trillion and additional ones are being sought, so that a gradual adjustment can be made, as inflation subsides and the power of households increases and companies are not affected. However, a part will remain unamortized, explained the minister.

For example, one form of compensation was to reduce the SOAT for motorcycles and taxis to offset the increase in the price of gasoline. As well as an increase in social spending for all the programs proposed by the Government and that will only be possible if the fiscal deficit and the FEPC are reduced.

According to Ocampo, during the government of Iván Duque, social spending was reduced by 20%, due to the loss of investor confidence to which the increase in inflation was added from the portfolio.

By December 2022, the price of a gallon of gasoline with the increase of 200 pesos is located at $9,778, although in the main cities it was above 10,000 pesos. But by reducing the government’s upward amortization of fuels, it should increase its value for the next year.

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