BofA Says Colombia Uses Creative Accounting to Hit Fiscal Target
- Pension fund money paying for current spending, BofA says
- Finance Ministry said pension fund was at risk of insolvency
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Colombia is using “creative accounting” to hit its budget targets by using assets from a disability pension fund to finance current spending, according to Bank of America Corp.
In its medium-term financial plan published on the Finance Ministry’s website last month, the government included about 3 trillion pesos ($1 billion) of assets from state-controlled insurance company Positiva Compania de Seguros S.A. among its 2015 revenues. This helps the government to comply with the letter of its fiscal sustainability law, or “fiscal rule”, at a time of falling oil revenue, while saddling itself with longer-term liabilities, said Francisco Rodriguez, an economist at Bank of America.