Bogotá looks to bond market, multilateral lenders for COVID-19 funding
April 3, 2020 |
Colombia's capital city has room to take on additional debt, finance secretary says
The Bogotá city government said in a securities filing on Thursday it is considering issuing local bonds as well as seeking resources from multilateral banks to finance expenditures required to tend to the emergency created by coronavirus outbreak and to continue executing its development plan.
In an online presentation given to the Bogotá City Council on Tuesday, Mauricio Ramírez, the city's finance secretary, laid out the rationale for the extra funds. (Ramírez speaks from roughly minute 21 through minute 46)
"COVID-19 will lead to a fall in fiscal revenues, especially those that depend on economic activity, like the industry and commerce tax (ICA)," said Ramírez. He added that the city would also incur more than COP1.4 trillion ($342 million) in additional expenses because of the crisis.
The city can cover some of this with existing resources, and the budget is being reviewed, he said. "But this will not be enough, and we are going to have to increase our debt level," he added.
Ramírez said that the city has a track record of responsible fiscal management. "Our debt in only 3% of the city's GDP," he said, "and that gives us a fiscal space that we must use responsibly."
The city is responding to the emergency with a program of direct cash transfers for 350,000 low income families that could cost COP213 billion per month during the lockdown. The health department also needs COP1 trillion to buy hospital beds, acquire a new building and furnishing operating rooms.
Ramírez said that the city should also have access to the liquidity being provided by the central government through the Emergencies Mitigation Fund (FOME) created on March 23.
The number of confirmed COVID-19 cases in Colombia reached 1,161 on Thursday with 19 deaths. Globally, the number of confirmed cases has topped the 1 million mark with 51,485 deaths reported.