Abstract
This Selected Issues paper analyzes spillover risks for Colombia. It highlights that external shocks could spill over to the Colombian economy through the country’s important and growing trade and financial linkages with the rest of the world. Colombia would be most exposed to a decline in oil prices, which could have a sizable adverse impact on the balance of payments, the fiscal accounts and growth. Growth shocks in key trading partners could also have a negative impact, particularly in the United States, which is Colombia’s main trading partner. Colombia’s fiscal rule and adjustment in the context of resource wealth is also analyzed.
Colombia’s Fiscal Rule and Adjustment in the Context of Resource Wealth1
A. Introduction
1. Colombia has introduced a fiscal rule in recent years. In June 2011, Congress approved a budget balance fiscal rule for Colombia’s central government. This rule (that started being implemented in 2012) calls for a decreasing central government’s structural deficit (correcting for oil revenues and the output gap) to be below 2.3 percent of GDP in 2014, 1.9 percent in 2018, and 1.0 percent starting in 2022. The 2013 medium term fiscal framework (MTFF) projects an additional decline in the deficit to 0.8 percent in 2023 and 2024.
2. Public savings implied by the fiscal rule need to be evaluated in the context of revenue from natural resources and development needs. Like other resource-rich countries, Colombia faces challenges of managing this revenue to optimally smooth consumption and investment decisions over time, avoid boom-bust cycles, and transform the resource wealth into other assets, including infrastructure, to support Colombia’s development needs.
3. This paper analyses Colombia’s fiscal rule and implied fiscal consolidation over the medium-term in the context of its resource wealth. It provides an overview of recent fiscal changes, evaluates the intertemporal savings behavior of the medium-term fiscal rule against simple benchmarks for resource-rich countries, illustrates the fiscal effort to achieve the medium-term targets under the fiscal rule, and presents debt trajectories under alternative scenarios.
B. The Fiscal Regime and Recent Changes
4. Key elements of Colombia’s fiscal framework have been in place for more than a decade.
Constraints on sub-national fiscal balances were introduced during the late 1990s. Law 358 (1997; “Ley de semáforos”; traffic lights law) gives the Ministry of Finance and Public Credit authority to limit the level of indebtedness of sub-national governments. Law 617 (2000; “Ley de responsabilidad fiscal territorial”; fiscal responsibility law for territories) established expenditure limits for both non financial public sector (NFPS) and sub-national governments. For any local government, current expenditures cannot exceed a fraction of its freely disposable current revenues. A local government not adhering to this rule would have to agree to a fiscal adjustment plan, to be monitored by the Ministry of Finance.
A fiscal responsibility law (underpinning the formulation of a medium-term fiscal framework) was approved in 2003. The Fiscal Transparency and Responsibility Law (Law 819) requires the central government to present the MTFF to Congress each year. In particular, the central government has to report on fiscal performance over the previous year, and in the event of non-compliance with the targets set in the previous MTFF, it shall explain such deviation and present corrective measures. Sub-national governments are also required to present their MTFF to assemblies and councils.
5. The government further strengthened the fiscal framework in 2011–12.
A fiscal sustainability principle was added as a constitutional criterion.
The government adopted reforms to strengthen the management and distribution of oil and mining royalties. As mandated by the new oil and mining royalty regime, in 2012 the government formulated a bi-annual royalty-funded capital budget and created investment committees to approve viable projects.
A structural balance rule was enacted at the central government level. The rule prescribes lowering the structural deficit to 2.3 percent of GDP by 2014 and keeping it below 1 percent from 2022 onwards. The rule has a well-defined escape clause, which allows for fiscal expansion when the expected output growth rate is at least 2 percentage points lower than potential. Furthermore, in case of extraordinary events threatening the macroeconomic stability of the country, the limits in the fiscal rule may be temporarily suspended, subject to the favorable opinion of CONFIS (an internal fiscal council headed by the Finance Minister). In mid-2012, the government created two technical committees to provide inputs on the output gap and structural oil prices to the Consultative Committee charged with devising the methodology and other operational aspects of the rule.
The government outlined a debt management strategy. The strategy tilts the composition of public debt toward domestic-currency debt based on objectives of minimizing risks and costs.
C. Fiscal Use of Natural Resource Wealth
6. Colombia has a significant amount of natural resource wealth. The majority of natural resource fiscal revenues come from oil. Oil-related revenue accounts for about 17 percent of fiscal revenue of the combined public sector (4.8 percent of GDP), and 18 percent of fiscal revenue for the central government (3.1 percent of GDP). There is great uncertainty about the level of oil reserves in Colombia with proven reserves of between 6 and 8 years over the last decade, and other definitions of reserves suggesting a much longer reserve horizon. The country also possesses the largest coal reserves in Latin America, is the world’s biggest producer of emeralds, and has significant amounts of gold and nickel. Colombia also produces natural gas, copper, iron ore and bauxite.
7. Resource-rich countries face several decisions on the use of resource revenue. First, the country needs to choose how much of the resource wealth to consume versus save each year. Second, a decision needs to be taken on how to invest revenues that are saved, including building up foreign assets through a sovereign wealth fund, drawing down public debt, and investing in domestic projects that generate returns over time. The framework for managing resource wealth also needs to deal with volatility stemming from commodity price fluctuations.
8. The IMF has developed a framework for analyzing intertemporal use of resource revenues.2 Resource-dependent economies are identified as those that have resource revenue above 20-25 percent of total revenues, and a reserve horizon of less than 30 to 35 years. Colombia’s revenues from oil and minerals are somewhat below the definition of a resource-dependent country, but are still significant, and there is great uncertainty about the level of natural resource reserves in Colombia.
9. Colombia’s non-resource primary balance (NRPB) is estimated to be below benchmarks for resource-rich countries. Common benchmarks for the NRPB are those that maintain net public wealth constant as a percent of non-resource GDP, in real per capita terms, or in real terms.3 The central government’s non-oil balance for 2013, estimated at -3 percent of GDP, was below the least restrictive of the NRPB benchmarks (i.e., keeping wealth constant in real terms), even under an assumption of 120 years of natural resource production.
Table: Non-Resource Primary Balance (NRPB) Necessary to Keep Net Public Wealth Constant
Table: Non-Resource Primary Balance (NRPB) Necessary to Keep Net Public Wealth Constant
| Years of production | 30 | 60 | 90 | 120 |
|---|---|---|---|---|
| (Percent of GDP) | ||||
| 2013 Net Public Wealth | 34.6 | 58.7 | 67.3 | 70.3 |
| 2013 NRPB, constant wealth in real terms | −0.9 | −1.5 | −1.7 | −1.8 |
| 2013 NRPB, constant wealth in real per capita terms | −0.6 | −1.0 | −1.1 | −1.2 |
| 2013 NRPB, constant wealth share of NR GDP | 0.9 | 1.5 | 1.7 | 1.8 |
Table: Non-Resource Primary Balance (NRPB) Necessary to Keep Net Public Wealth Constant
| Years of production | 30 | 60 | 90 | 120 |
|---|---|---|---|---|
| (Percent of GDP) | ||||
| 2013 Net Public Wealth | 34.6 | 58.7 | 67.3 | 70.3 |
| 2013 NRPB, constant wealth in real terms | −0.9 | −1.5 | −1.7 | −1.8 |
| 2013 NRPB, constant wealth in real per capita terms | −0.6 | −1.0 | −1.1 | −1.2 |
| 2013 NRPB, constant wealth share of NR GDP | 0.9 | 1.5 | 1.7 | 1.8 |
10. These estimates rely on standard parameter values. The real return on wealth is assumed to be 2.5 percent, the inflation rate is 3 percent, non-resource GDP growth is 5.1 percent, and population growth is 0.8 percent. The discount rate is computed using the real return of wealth and inflation. Unless noted otherwise, assumptions for 2013–2024 are those in Colombia’s 2013 MTFF. Central government’s revenues from oil and minerals as a percentage of GDP are assumed to decline linearly from the 2013 to the 2024 value reported in the MTFF. It is also assumed that after 2024, the nominal GDP growth rate is 7.5 percent, and the central government’s resources from oil and minerals grow 2.0 percent during the assumed years of production (reflecting price growth) and are zero after that. Net public wealth is computed as the present value of the central government’s revenue from oil and minerals minus its 2013 net debt.
11. Estimates are not very sensitive to the assumption on the rate of return on wealth. Lowering the assumed real rate would increase net public wealth but would lower the percentage of this wealth the government should expend to keep its wealth constant. Thus, the effect of changing the assumed real rate on the NRPB that keeps wealth constant is ambiguous and may be small. For instance, the NRPB that would keep wealth constant in real terms under 120 years of production is 1.6 percent of GDP under an assumed real rate of 1.5 percent (this value is similar to the 1.8 percent obtained under the baseline assumption).
12. The fiscal consolidation prescribed by Colombia’s fiscal rule could stabilize net public wealth. The rule mandates the central government to reduce its structural deficit to 1 percent of GDP by 2022. The authorities’ medium term fiscal framework (MTFF) projects an additional decline to 0.8 percent of GDP by 2024. Considering that oil and mineral-revenues and interest payments are projected to decline by 0.9 and 0.6 percentage points of GDP during the same period, the NRPB would improve by 1.9 percentage points of GDP by 2024. Starting from an estimated central government net public wealth of 58.7 percent of GDP in 2013 (assuming 60 years of production), adherence to the fiscal plan in the MTFF would imply that real net public wealth bottoms out at 70 percent of its 2013 value in 2030, and starts increasing after that (assuming the 2024 primary balance is maintained).4 Since Colombia’s GDP growth is projected to be higher than the likely rate of return of financial wealth, net public wealth as a percentage of GDP decreases more abruptly, bottoming out in 2042 at 15.2 percent (Figure 1). However, because high projected GDP growth would make future generations richer than the current generation, it would not be necessary to increase current savings to establish intergenerational real income parity.
Colombia Net Public Wealth
Citation: IMF Staff Country Reports 2014, 167; 10.5089/9781498302128.002.A002
Source: Fund staff calculations.Colombia Net Public Wealth
Citation: IMF Staff Country Reports 2014, 167; 10.5089/9781498302128.002.A002
Source: Fund staff calculations.Colombia Net Public Wealth
Citation: IMF Staff Country Reports 2014, 167; 10.5089/9781498302128.002.A002
Source: Fund staff calculations.D. Challenges to the Planned Consolidation
13. There are significant challenges to the consolidation foreseen in Colombia’s fiscal framework. The MTFF projects this consolidations will be achieved with an unprecedented decline in expenditure that in some cases may be undesirable. The projected expenditure decline must achieve the planned deficit reduction while compensating for the projected decline in revenues (Figure 2).
MTFF Changes in Revenues and Expenditures
(Percent of GDP, 2013-2024)
Citation: IMF Staff Country Reports 2014, 167; 10.5089/9781498302128.002.A002
Source: Colombia’s 2013 MTFF.MTFF Changes in Revenues and Expenditures
(Percent of GDP, 2013-2024)
Citation: IMF Staff Country Reports 2014, 167; 10.5089/9781498302128.002.A002
Source: Colombia’s 2013 MTFF.MTFF Changes in Revenues and Expenditures
(Percent of GDP, 2013-2024)
Citation: IMF Staff Country Reports 2014, 167; 10.5089/9781498302128.002.A002
Source: Colombia’s 2013 MTFF.14. Central government’s revenues as a percentage of GDP are projected to decline from 16.8 percent in 2013 to 15.9 percent in 2024. Revenues as a percentage of GDP are projected to start declining in 2016, from a 2015 peak of 17.1 percent. This decline is accounted for by the decline of the importance of government’s income coming from oil and minerals (from 3.0 percent of GDP in 2013 to 2.1 percent of GDP in 2024).
15. Expenditures are projected to decline as a percentage of GDP from 19.1 to 16.7. This decline is comprised of a fall in five expenditures categories:
Expenditures in wages and salaries are projected to decline from 2.2 percent in 2013 to 1.6 percent of GDP in 2024. To achieve this adjustment, expenditures in wages and salaries are assumed to grow at the rate of inflation, which is projected to be lower than the GDP growth rate. However, such a decline as a share of GDP is unprecedented. Between 1994 and 2012, expenditures in wages and salaries remained between 1.9 and 2.3 percent of GDP (Figure 3).
Expenditures in goods and services are projected to decline from 0.8 to 0.5 percent of GDP.5 This decline also assumes that expenditures in goods and services grow at the rate of inflation, and is also unprecedented. Expenditures in goods and services as a percent of GDP have been roughly constant in the past (Figure 3), with a 1994–2012 average of 0.8 percent of GDP.
Investment is projected to decline from 2.9 to 2.3 percent of GDP. This decline may be undesirable given Colombia’s investment needs and projected new investment expenditures due to the 4G infrastructure program, with budgetary caps (“vigencias futuras”) reaching 0.4 percent of GDP between 2020 and 2044.
Following existing legislation, transfers are projected to decline by 0.3 percent of GDP. This does not consider the probable fiscal costs of reforms to the social security system needed to increase coverage.
Interest payments are projected to fall 0.6 percent of GDP.
Historical Central Government’s Expenditures
(Percent of GDP)
Citation: IMF Staff Country Reports 2014, 167; 10.5089/9781498302128.002.A002
Source: Ministry of Finance.Historical Central Government’s Expenditures
(Percent of GDP)
Citation: IMF Staff Country Reports 2014, 167; 10.5089/9781498302128.002.A002
Source: Ministry of Finance.Historical Central Government’s Expenditures
(Percent of GDP)
Citation: IMF Staff Country Reports 2014, 167; 10.5089/9781498302128.002.A002
Source: Ministry of Finance.16. In addition to achieving these expenditure reductions, there are other challenges to the fiscal consolidation proposed in the MTFF. For instance, the MTFF also projects that a decline of 1.3 percentage points of GDP in revenues due to the gradual elimination of taxes on financial transactions and wealth will be fully compensated by an increase in revenues from other taxes. Other fiscal risks include contingent liabilities from Public-Private Partnerships (PPPs), potential fiscal costs of a successful peace process, and fiscal pressures from the pensions and health care systems.6 Of course, there are also mitigating factors for these risks. For instance, a successful peace process could have a positive impact on GDP growth and thus on debt dynamics, and a further increase in formality would be reflected in higher tax revenues. Risks to the MTFF projections are illustrated by the latest revision: the 2013 MTFF projects a 2023 debt to GDP ratio of 26.4 percent, higher than the 24.5 percent projected in the 2012 MTFF.
17. Furthermore, Colombia’s fiscal accounts do not reflect investment financed with PPPs in the debt stock. The MTFF projects the central government’s net debt to decline from 33.6 percent of GDP in 2013 to 25.3 percent of GDP in 2024. However, adding investment financed with PPPs to the debt stock could offset this debt decline. The present value of planned investments to be financed through PPPs under the 4G infrastructure program is estimated to be 6.4 percent of GDP.7 The present value of government’s expenses for this program projected in the MTFF through 2044 is 15.6 percent of GDP. The government also guarantees toll revenues for the program.
E. Debt Dynamics in Alternative Scenarios
18. For illustrative purposes, alternative debt dynamics can be calculated under combinations of the following less favorable assumptions than those in the MTFF:
Central government’s investment remains constant as a percent of GDP at the 2013 level (Figure 4).
Expenditures in wages and salaries and goods and services remain constant as a percent of GDP at the 2013 level (Figure 4).
The government’s revenues from the oil and mining sector decline more than projected in the MTFF. The MTFF assumes oil prices grow with the U.S. PPI for raw materials. Oil production is projected to increase by 19 percent between 2013 and 2018, and to decline by 12 percent between 2018 and 2024 (resulting in a 2014 production 5 percent higher than the one in 2013; Figure 5). For the alternative scenario, it is assumed that oil revenues decline to 1.2 percent in 2024 (instead of declining to 2.1 percent, as in the MTFF). This assumption is consistent with: (i) the growth of the government’s oil and mining income between 2013 and 2024 following the growth of the value of the oil production, and (ii) a decline of 20 percent in oil prices through 2019 consistent with future prices, and oil prices growing at the rate assumed in the MTFF after 2019 (Figure 5). The yearly effect in the primary balance is computed assuming that revenues as a percent of GDP decline linearly from the 2013 value to the 2024 value, both in the MTFF and in the alternative scenario (Figure 4).
The GDP growth rate (4.0 percent) is lower than the real effective interest rate (5.0 percent). The average growth rate in the MTFF is 4.6 percent. For expositional simplicity, it is assumed that the lower growth rate does not have a negative effect on the primary balance. Thus, this scenario presents a lower bound to the effect of a negative growth shock to the debt dynamics. This scenario is combined with the shocks to the primary balance presented above.8
Primary Balance Decline Under Alternative Scenarios
(Percent of GDP)
Citation: IMF Staff Country Reports 2014, 167; 10.5089/9781498302128.002.A002
Source: Fund staff calculations.Primary Balance Decline Under Alternative Scenarios
(Percent of GDP)
Citation: IMF Staff Country Reports 2014, 167; 10.5089/9781498302128.002.A002
Source: Fund staff calculations.Primary Balance Decline Under Alternative Scenarios
(Percent of GDP)
Citation: IMF Staff Country Reports 2014, 167; 10.5089/9781498302128.002.A002
Source: Fund staff calculations.
Oil Assumptions
Citation: IMF Staff Country Reports 2014, 167; 10.5089/9781498302128.002.A002
Sources: Colombia’s 2013 MTFF and Fund staff calculations.Oil Assumptions
Citation: IMF Staff Country Reports 2014, 167; 10.5089/9781498302128.002.A002
Sources: Colombia’s 2013 MTFF and Fund staff calculations.Oil Assumptions
Citation: IMF Staff Country Reports 2014, 167; 10.5089/9781498302128.002.A002
Sources: Colombia’s 2013 MTFF and Fund staff calculations.19. Debt dynamics are computed using the simplest possible equation. The debt-to-GDP ratio evolves according to
where d denotes the debt-to-GDP ratio, r the real effective interest rate paid for debt, g the real GDP growth rate, and pb the primary balance as a percentage of GDP. Using this simple equation, a baseline constant real effective interest rate of 4.3 percent is inferred from the debt reduction reported in the MTFF, using the reported assumptions for the growth rate and the primary balance (Figure 6).
Baseline assumptions and debt
Citation: IMF Staff Country Reports 2014, 167; 10.5089/9781498302128.002.A002
Source: Fund staff calculations.Baseline assumptions and debt
Citation: IMF Staff Country Reports 2014, 167; 10.5089/9781498302128.002.A002
Source: Fund staff calculations.Baseline assumptions and debt
Citation: IMF Staff Country Reports 2014, 167; 10.5089/9781498302128.002.A002
Source: Fund staff calculations.20. With the baseline assumptions for the growth and interest rates, a failure to achieve any of the planned expenditure reductions or a larger decline in revenues from oil and minerals would eliminate most of the debt reduction projected in the MTFF (Figure 7). Failure to achieve the planned reduction of investments would have the larger effect on debt dynamics, with a projected 2024 debt ratio of 33.8 percent of GDP, higher than the estimated 2013 level (33.6 percent). This is so even though the increase of the primary balance from the failure to reduce investment would be lower than the one from other alternative scenarios, because the investment reduction is more front-loaded (Figure 4). The projected 2024 debt to GDP ratio is 30.3 percent without a reduction of wages and salaries and goods and services, and 32.2 percent with the larger reduction of revenues from oil and minerals. The combinations of the three negative assumptions for the primary balance would result in a continuously increasing debt to GDP ratio that would reach 45.8 percent in 2024.
Central Government’s Debt Dynamics
(Percent of GDP)
Citation: IMF Staff Country Reports 2014, 167; 10.5089/9781498302128.002.A002
Source: Fund staff calculations.Central Government’s Debt Dynamics
(Percent of GDP)
Citation: IMF Staff Country Reports 2014, 167; 10.5089/9781498302128.002.A002
Source: Fund staff calculations.Central Government’s Debt Dynamics
(Percent of GDP)
Citation: IMF Staff Country Reports 2014, 167; 10.5089/9781498302128.002.A002
Source: Fund staff calculations.21. With the more pessimistic assumptions for the growth and interest rates, a failure to achieve any of the planned expenditure reductions or the larger decline in revenues from oil and minerals would result in an increasing debt to GDP ratio (Figure 8). By itself, the more pessimistic assumptions for the growth and interest rate eliminates the majority of the debt reduction projected in the MTFF, resulting in a projected 2024 debt-to-GDP ratio of 30.7 percent. The projected 2024 debt to GDP ratios are 39.1 percent without the fall of investment expenditures, 35.3 percent without a reduction in expenditures in wages and salaries and goods and services, and 37.2 percent with the larger reduction of revenues from oil and minerals. The combinations of the four negative assumptions would result in a continuously increasing debt to GDP ratio that would reach 51.6 percent in 2024.
Central Government’s Debt Dynamics (r-g = 1%)
(Percent of GDP)
Citation: IMF Staff Country Reports 2014, 167; 10.5089/9781498302128.002.A002
Source: Fund staff calculations.Central Government’s Debt Dynamics (r-g = 1%)
(Percent of GDP)
Citation: IMF Staff Country Reports 2014, 167; 10.5089/9781498302128.002.A002
Source: Fund staff calculations.Central Government’s Debt Dynamics (r-g = 1%)
(Percent of GDP)
Citation: IMF Staff Country Reports 2014, 167; 10.5089/9781498302128.002.A002
Source: Fund staff calculations.F. Fiscal Effort to Improve Debt Dynamics
22. Achieving the fiscal consolidation in the MTFF under the more pessimistic assumptions described above would require an increase in revenues. The required fiscal effort was estimated as the permanent improvement in the central government’s primary balance required starting in 2015 to achieve the central government’s debt reduction projected in the MTFF by 2024 (the MTFF projects that the central government’s debt will decline from 33.6 percent of GDP in 2013 to 25.3 percent of GDP in 2024). The analysis shows that compensating for a larger decline in oil and mining revenue would require a fiscal effort of 0.7 percentage points of GDP, maintaining stable ratios of current and investment spending would imply fiscal efforts of 0.5 and 0.9 percent of GDP respectively, while a more adverse growth and interest rate environment could cost 0.4 percent of GDP. The analysis suggests that the authorities may face a total fiscal effort of about 2½ percent of GDP to meet their fiscal consolidation goals if the adverse scenarios considered materialized.
Fiscal Effort during 2015 to 2024 required to Compensate for Adverse Scenarios
(Percent of GDP)
Citation: IMF Staff Country Reports 2014, 167; 10.5089/9781498302128.002.A002
Source: Fund staff calculations.Fiscal Effort during 2015 to 2024 required to Compensate for Adverse Scenarios
(Percent of GDP)
Citation: IMF Staff Country Reports 2014, 167; 10.5089/9781498302128.002.A002
Source: Fund staff calculations.Fiscal Effort during 2015 to 2024 required to Compensate for Adverse Scenarios
(Percent of GDP)
Citation: IMF Staff Country Reports 2014, 167; 10.5089/9781498302128.002.A002
Source: Fund staff calculations.G. Conclusions
23. Colombia has a strong fiscal framework that prescribes a prudent, albeit challenging, fiscal consolidation over the medium term. A number of changes have taken place over the past decade and a half to strengthen Colombia’s fiscal framework, including the introduction of a structural balance rule at the central government level. This rule prescribes a path of adjustment over the medium-term, which would compare well to standard benchmarks on the intertemporal use of fiscal revenue from resource wealth. However, achieving the adjustment will be challenging. An increase in revenues could help achieve the consolidation envisioned in the fiscal framework without unprecedented or undesirable reductions in expenditure.
Prepared by Leonardo Martinez and Martín Wachs.
See International Monetary Fund, 2012, “Fiscal Frameworks for Resource Rich Developing Countries,” IMF Staff Discussion Note 12/04 (Washington: International Monetary Fund).
See International Monetary Fund, 2012, “Macroeconomic Policy Frameworks for Resource-Rich Developing Countries—Analytical Frameworks and Applications,” IMF Policy Paper (Washington: International Monetary Fund). The NRPB that keeps wealth constant in real terms is given by W*ρ, where W denotes net public wealth as a percentage of GDP and ρ denotes the real rate of return on wealth. The NRPB that keeps wealth constant in real per capita terms is given by W*(ρ-p), where p denotes the rate of population growth. The NRPB that keeps wealth constant as a percentage of non-resource GDP is W*(ρ-γ), where γ denotes the rate of non-resource GDP growth.
If the government only achieves a 0.8 percent deficit after 2024, debt would stabilize at 10.5 percent of GDP.
Estimated expenditures in goods and services were 1.0 percent of GDP in 2013, higher than the 0.8 percent projected in the 2013 MTFF.
Following Law 819 of 2003, the MTFF includes an assessment of non-explicit public debts associated with pension and severance liabilities and a valuation of contingent liabilities related with state guarantees in PPP projects, credit operation guarantees and lawsuits against the state.
Colombia’ s Consejo Nacional de Política Económica y Social, document 3760.
Alternative scenarios assume the government does not respond to the proposed shock. Section D presents the fiscal effort required to compensate the shock in each alternative scenario.
