(Bloomberg) -- Colombia is on track for its widest fiscal deficit since the Covid-19 pandemic as falling tax revenues leave a hole in the nation’s finances. 

The government said Friday it will target a 2024 deficit of 5.6% of gross domestic product this year, from a previous target of 5.3%. 

The peso and local currency bonds have dropped in recent days as nervous investors ditch the nation’s assets amid concerns over the ballooning fiscal deficit.

The government will trim its 2024 budget by 20 trillion pesos ($5 billion), Finance Minister Ricardo Bonilla said. Bonilla reiterated his commitment to complying with the fiscal rule, or balanced budget act, which imposes limits on government borrowing. 

Speaking alongside Bonilla, Public credit director Jose Roberto Acosta said the government will increase bond auctions in the local market by 3 trillion pesos ($725 million) this year, to finance some of the extra deficit.

The peso has been the world’s worst-performing currency this week, while local peso bonds have also sold off. 

President Gustavo Petro has said that any spending cuts will not affect his social programs.

Fitch and S&P Global have already downgraded Colombia to junk, while Moody’s Ratings still has it listed at Baa2 —the second-lowest investment grade rating— with a stable outlook.

 

--With assistance from Andrea Jaramillo and Nicolle Yapur.

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