Colombia's fiscal deficits will be higher than expected this year and the government is cutting back on public spending to help fill the gap, Finance Minister Oscar Zuluaga said on Monday. The country's 2010 consolidated fiscal deficit will be 3.7 percent of gross domestic product, up from the government's previous target of 3.5 percent, Zuluaga told a press conference while announcing Colombia's revised financing plan.

The central government fiscal deficit will be 4.5 percent of GDP, up from a previous target of 4.3 percent, he said. Colombia will cut public spending by 4.2 trillion pesos ($2.13 billion) in 2010, Zuluaga added. "We will make the necessary effort to guarantee fiscal sustainability," he said. Zuluaga stood by the government's prediction that the country's economy will expand by 2.5 percent this year, after eking out slightly positive growth in 2009.

Colombia will receive 4.4 trillion pesos ($2.23 billion) from privatising state enterprises, Zuluaga said, including $1.5 billion expected to come from the sale of the state's majority share in electricity company Isagen. The government aims to sell 26.03 trillion pesos ($13.23 billion) in local TES treasury paper in 2010, 13.03 trillion pesos ($6.62 billion) of which will be raised through auctions, Zuluaga said. The country will have inflation of 3 percent this year, compared with 2009's rate of 2 percent, he predicted.

Copyright Reuters, 2010