Government Increases Fiscal Deficit Target for 2024
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Loading... - Bruce Stevens
- 11 Jul 2024
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The Congress of the Republic has enacted Legislative Decree Law No. 32089, which allows the Executive to legislate on fiscal balance matters, aiming to establish a gradual reduction of the fiscal deficit of the Non-Financial Public Sector (SPNF) with set annual limits.
Key Highlights
- Fiscal Deficit Target for 2024: The fiscal deficit target has been raised from 2% to 2.8% of GDP. This target should not exceed the fiscal deficit recorded in 2023.
- Future Deficit Targets: For 2025, the fiscal deficit should not be greater than 2.2% of GDP, with a goal to reach 1.0% of GDP by 2028.
Public Debt Limits: The decree stipulates that the public debt of the SPNF should not exceed 38% of GDP in 2024 and must be reduced to 30% of GDP by 2035.
Objectives and Implications
- Gradual Reduction Strategy: The purpose of this legislative decree is to ensure an orderly and gradual return of the fiscal deficit and public debt to their medium-term macro-fiscal rules.
- Economic Support: The reduction plan is aligned with supporting the national economy's reactivation while gradually complying with medium-term fiscal rules outlined in Legislative Decree No. 1276.
The Congress emphasized that these measures are critical for maintaining fiscal discipline and ensuring the sustainable management of public finances, balancing economic recovery needs with long-term fiscal responsibility.
