Colombia's finmin Carrasquilla sees tricky problems with economy
BOGOTA, Aug 10 (Reuters) - Colombia's economy is not satisfactory and faces some "quite complicated" fiscal problems, new Finance Minister Alberto Carrasquilla said in his first meeting with reporters on Friday.
Carrasquilla, who replaced Mauricio Cardenas this week, will be at the sharp end of President Ivan Duque's drive to bolster economic growth, reform the tax code and strengthen the middle class.
Carrasquilla, 59, faces the difficult task of pushing unpopular fiscal changes through a divided Congress - including a pension system overhaul - while helping stimulate weak growth and warding off a downgrade from credit ratings agencies.
"We have a series of quite complicated problems in the fiscal area, we have fiscal pressures that deserve attention. All the problems we found have a solution," said Carrasquilla.
"The Colombian economy is in a situation that's not satisfactory," he said, adding it will not be easy to reach the 2019 fiscal deficit goal of 2.4 percent.
Duque, who replaced Juan Manuel Santos on Tuesday, has promised to bolster the $324 billion economy with tax cuts and support for industries like oil and coal, the country's top exports. Carrasquilla said the economy will likely grow between 2.5 percent and 3 percent this year.
The previous government proposed an $89.7 billion budget for 2019. It would be an increase on this year's spending but included a reduction in investment, and Carrasquilla signaled the new administration may make changes.
"The budget that was presented has a sharp fall in the flow of investment, what was presented in the budget is insufficient to find a way to cover those holes and to find a way to do it all within the fiscal rule," Carrasquilla said.
Predecessor Cardenas had said the government will miss its tax target this year by 2 trillion pesos (some $690 million) because of a slower-than-expected recovery in consumer spending, which has reduced the collection of value added tax.
Carrasquilla said he was doing everything he could to ensure tax reforms are proposed to congress as quickly as possible.
The poor should not be paying VAT, he said, and businesses are also paying too much.
"We don't have the slightest doubt that total collection should be much higher," he said. "Business tax is excessive - the rates that formal businesses are paying are excessive."
Carrasquilla was finance minister from 2003 to 2007 under former President Alvaro Uribe - Duque's mentor - and also worked at the central bank and the Inter-American Development Bank. (Reporting by Carlos Vargas Writing by Helen Murphy and Julia Symmes Cobb editing by Jonathan Oatis)
