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LATIN AMERICA ADVISOR

LATIN AMERICA ADVISOR

A daily publication Of the dialogue

December 16, 9383

Would a Major Budget Change Benefit Colombians?

Colombia’s Congress is debating whether to shift more money and responsibilities to regions. The country’s Congress is pictured. // File Photo: Martinduquea via Creative Commons.

Q

  • Colombia’s Congress is debating a measure that would substantially increase transfers from the federal government to regions, requiring the government to move 39.5 percent of its revenue to provinces and cities by 2036, an increase of 26 percent from the current level, Bloomberg News reported. While official estimates point out that the change would cost the central government $76 billion over the next 12 years, officials have said the move would be fiscally neutral as local and provincial governments would assume more spending responsibilities from the government. What are the main reasons behind the proposed change? How would it affect government services for Colombians? What would the change mean for the country’s fiscal and economic standing?

A

Gunther Baumgarten, senior Americas analyst at Verisk Maplecroft: “Proponents of the reform of the general revenue sharing system, including President Gustavo Petro, say it will advance government decentralization as envisioned in the constitution by giving departmental and municipal authorities more financial and administrative independence. They argue that increasing the revenue share for regional authorities will improve local public services and foster the economic development of neglected areas. The government claims that the reform will have zero fiscal impact, noting that it also involves regional authorities assuming more responsibilities for providing public services and reducing central government responsibilities. But critics, including some government officials, are skeptical and warn…”

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ABOUT THE LATIN AMERICA ADVISOR

The Inter-American Dialogue publishes the Latin America Advisor every business day for a distinguished membership of informed corporate leaders, scholars, and government officials invested in Latin America’s development and future. The Advisor‘s highly regarded Q&A section covers questions submitted by subscribers themselves. Commentators regularly include heads of state, business leaders, diplomats, economists, analysts, and thought leaders from around the world. Many of the world’s largest and fastest-growing companies subscribe to the Advisor. To subscribe, click here. For terms and conditions, click here. For more information, contact Gene Kuleta, editor of the Advisor, at gkuleta@thedialogue.org.
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Diego Arria
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Merike Blofield
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Devry Boughner Vorwerk
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Joyce Chang
Global Head of Research,
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Marlene Fernández
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Peter Hakim
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Jon E. Huenemann
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James R. Jones
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Craig Kelly
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Exxon Mobil

Barbara Kotschwar
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John Maisto
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Nicolas Mariscal
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Thomas F. McLarty III
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Beatrice Rangel
Director,
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Ernesto Revilla
Head of Latin American Economics, Citi

Gustavo Roosen
President,
IESA

Andrés Rozental
President, Rozental &
Asociados

Shelly Shetty
Managing Director,
Sovereigns, Fitch

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