Colombian Finance Ministry Pledges Fiscal Transparency

(Bloomberg) -- Colombia’s Finance Ministry sends emailed response to questions about its asset-sale plans, and accusations that it is using accounting tricks to meet its fiscal target this year.

• “The government is aware of the concerns generated by our public asset-sale plan. We are also clear that we can’t sell assets to finance current spending. That is why we have insisted that our goal is to exchange an asset of low profitability and little generation of dividends for assets earmarked for gross fixed capital formation exclusively.”
• “We are calm about our macroeconomic programming and we want to give full confidence, not only to local analysts but also to international observers, that the fiscal accounts will be managed with complete transparency. Next year we will have the IMF auditing our accounts again and we believe that its article 4 assessment will be positive.”
• “In fact, many of the concerns related to the public asset-sale program are rooted in ignorance of fiscal accounting. The Ministry of Finance and Public Credit follows the 1986 Government Finance Statistics Manual of the IMF with modified cash basis accounting, which stipulates that in cases in which a privatization is made for policy purposes, these resources are determinants of the fiscal deficit and form part of the effective cash operations, being part of net lending. Given that the projected privatizations will be carried out for policy purposes, such as the financing of public investment projected in the mid-term fiscal plan 2019, this provision justifies that privatizations be accounted for as tax revenues (that is, above the line)”
• “This has been extensively analyzed by our macroeconomic team and we want to give full confidence to the public that any sale made by the government will follow the guidelines laid out in that manual. For this reason, we are not only convinced that the privatization program will allow us to comply with the deficit projected in the 2019 medium-term fiscal plan, but will also help maintain levels of social investment in public goods which help to boost economic growth”

To contact the reporter on this story: Oscar Medina in Bogota at omedinacruz@bloomberg.net

To contact the editor responsible for this story: Matthew Bristow at mbristow5@bloomberg.net

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