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BOGOTÁ DISTRITO CAPITAL

BOGOTÁ DISTRITO CAPITAL. Agenda. Introduction to the District of Bogotá Economic, Social Developments and Infrastructure Fiscal Situation Budget Public Debt. Introduction to the District of Bogotá. The District of Bogotá.

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BOGOTÁ DISTRITO CAPITAL

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  1. BOGOTÁ DISTRITO CAPITAL

  2. Agenda • Introduction to the District of Bogotá • Economic, Social Developments and Infrastructure • Fiscal Situation • Budget • Public Debt

  3. Introduction to the District of Bogotá

  4. The District of Bogotá • Bogotá is the capital city of Colombia and it is strategically located in the geographic centre of the American continent; in the eastern Andes mountain range and 1 hour away from both the Atlantic and Pacific Oceans • With over 7.3 million residents*, the District of Bogotá is among the 40 most populated urban centers in the world, and houses 15.7% of Colombia’s total population • Bogotá is divided into 20 localities that together comprise the District • The district is governed by a Mayor, a District Council, local administrative boards and other local authorities • The current mayor is Mr. Samuel Moreno Rojas who was elected in 2003 and will serve until December 2007 * According to the data from the 1993 Census

  5. Sustainable economic growth in both the District and the Country Bogotá is within the top ten cities in Latin America in terms of competitiveness Considerable increase in tax collection over the last 5 years Reduction of tax evasion Public spending austerity and priority in infrastructure investment Responsible handling of public debt and good pension coverage Sound financial statements and high levels of public information disclosure Employment and income generation in the region Modern integrated information systems High degree of financial regulation and public spending controls Investment Highlights

  6. Economic, Social Developments and Infrastructure

  7. Economic Growth (Real GDP) Economic Structure Inflation Improving Economic Situation Bogota’s Contribution to Colombian GDP Source: Dane y SDH-Dirección de Estadísticas y Estudios Fiscales

  8. Reduction in Poverty and Unemployment • During the 2002-2007 period the unemployment rate decreased at an average annual rate of 16.7% in 2002 to 9.1% in 2007 • Poverty rates decreased from 38.9% in 2002 to 23.8% in 2007, which makes Bogotá the Colombian city with the lowest poverty levels compared to other major cities Unemployment Levels in Bogotá when Compared to other Major Colombian Cities Percentage of Population Bellow Poverty Line Source: Dane, census 1993 y 2005. SDH, Dirección de Estadísticas y Estudios Fiscales Misión para el diseño de una estrategia para la reducción de la pobreza y la desigualdad – MERPD

  9. Improving Social Situation • Investments in the District’s security infrastructure produced a significant decrease in criminality, including, an average decrease of 34.0% in murder rates per 100,000 inhabitants from 2002 (28.5 homicides per 100,000 inhabitants) to 2006 (18.8 homicides per 100,000 inhabitants); • Improvements in the health sector, made through the renovation or construction of hospitals and the development of social health programs, have produced a significant decrease of certain mortality rates, and the coverage of the social security system has increased from 69.7% in 2002 to 72.7% in 2005 Increase in Health Expenditure

  10. The District has contributed to the improvement in the public education system through the increase of spaces available for new student and the construction of educational infrastructure. In particular there has been great advance in the following areas: Guaranteed free education School meals Subsidies tied to school assistance School transportation Health programs in schools Distribution of school supplies Improving Social Situation

  11. Improving Social Situation Violent Deaths

  12. Improving Social Situation Deaths due to Automovilistic Accidents

  13. Improving Social Situation Robbery

  14. Diversified Economic Growth • The district GDP is diversified among a number of economic sectors, the largest of which are the financial, real estate, and commercial service sectors followed by the greater service sector, and the manufacturing sector Composition of Bogotá Economy Growth Per Sector Sources: Fedesarrollo-EOE. Calculations: SDH, Dirección de Estadísticas y Estudios Fiscales

  15. Infrastructure Actually, Transmilenio consisted of 52.2 miles of main routes on nine avenues. Two additional phases of the project are schedule to completed by 2016. When finished, the total network will consist of 241 miles over 22 avenues. In addition to the project of Transmilenio, Bogotá plans the construction of a Metro, that would maintain the tendency of city-planning development and it would be integrated to the present system of massive transport

  16. Fiscal Situation

  17. Tax Policy • The tax collection strategy of the District dictates as policy: • Reduce tax evasion through control and prosecution • Investment in the modernization of tax collection mechanisms • Strengthening of tributary administration • Management information systems optimization The District’s tax collection system is divided in three main areas: Direct Taxes Stamp Tax Indirect Taxes Commerce, Industry,Entertainment,Urban Development, Cigarettes,Beer, Gasoline, Publicity,Sporting Events, Poverty Fund In Benefit of CultureDevelopment and the Elderly Real Estate,and Vehicles

  18. Improvement in Tax Collection • The implementation of the District’s tax collection plans has led Bogotá to increase its tax proceeds at a real rate of 12% between 1991 – 2007 • The impressive growth is explained by the following factors • Increase in the tax base • Actualization and broadening of the taxable base • Reduction in the levels of tax evasion • Implementation of cultural programs • Establishment of new fiscal policies

  19. Fiscal Situation Administrative Reform. Organic Statute of Bogota - New ICA period - System Autoavalúo Tax Reform ICA - Increase in Rates by 38% - Updated Cadastral Gasoline surcharge implementation Recovery in economic activity - automatic adjustment of the properties by “IVIUR”. Economic Recession – Goods falling prices

  20. Fiscal Situation

  21. Fiscal Situation The Tax Revenues of the District Accounts for 4.3% of Bogotá GDP Fiscal Structure Tax Proceeds have Grown more than the Economy Tax Collection has Increase Over Time In million of 2004 real pesos

  22. Real State Updating Process Official map of Bogotá It has 160 layers with myriad physical and legal characteristics of the city and its parcels: parks, boundaries, public buildings, etc.

  23. Instrumental in the collection of an adequate property tax from the 2 million parcels in the city Real State Updating Process The Cadastral information is updated in its three components Areas, boundaries, and characteristics of the building are registered Physical Field visit Crossing information Legal Name of owner and ID number Econometric models Probabilistic samples Valuations doneby experts Commercial value of the property Economic

  24. Real State Updating Processes Fiscal year: 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

  25. Increase in the Tax Base Industry and Commerce Tax Vehicle Tax Real Estate Tax Tax CollectionImprovement Note: Figures in million of 2007 real pesos Note: Increased respect to 2003

  26. Budget

  27. Budget • The level of leverage that the District can undertake is regulated and controlled by national guidelines • The structure of the debt contracted by District is governed by the “Politica de Control de Riesgos de la Secretaria Distrital de Hacienda”. The regulator has imposed certain technical criteria to evaluate and control the risks of the District Public Debt Budget 2002 – 2007 Millions of COP Source: SDH Dirección Distrital de Presupuesto-SFD

  28. Budget Behavior Income Growth 2002 – 2007 Expenditures 2002 – 2007 Transfer to the District 2002 – 2007 Millions of dollars

  29. Public Debt

  30. National Debt and Risk Control Policies for Territorial Entities Constitution Article 364: Debt in territorial entities must not exceed its payment capacity. Law 358/1997 Law 617/2000 Law 819/2003 Establish parameters to define payment capacity as well as the minimum operational savings in order to grant debt payment and an additional amount for investment purposes. Establish two indicators: Debt Capacity: Interest/Operational Savings < 40% Sustainability: Balance/Current Revenues. < 80% Establish operational expenditures limits for territorial entities Operational expenditures/non specific destination revenues < 50% Establish a financial planning instrument "Medium Term Fiscal Frame" through which primary superavit and sustainability goals are set for a time period of 10 years. The primary objective for this instrument is to grant debt sustainability and economic growth.

  31. National Risk ManagementLevels Law 358/1997 Payment Capacity Debt Sustainability Law 617/2000 Source: DDCP - SDH

  32. Administer by the District’s Directorate of Public Credit VaR – Liability Portfolio Liquidity Risk: Annual Amortization of 15% to 18% of total debt FX Risk: Maximum of 20% denominated in a Foreign Currency Interest Rate Risk: Minimum 30% in fixed rate and maximum 70% in variable rate. Economic variable projections and risk scenarios Risk Policy Committee Risk Committee Office of Risk Analysis and control Politics, Guidelines and Toolsfor the risk management of the District’s portfolio Liabilities

  33. Debt and Risk Control Policies Organizational Structure Risk Policy Committee Risk Committee Office of Risk Control Directorate of Public Credit Establishes Guidelines and Policies Defines and Approves the operational guidelines for the implementation of risk control strategies Administers the debt portfolio, distributes the resources and manages the risks Updates and monitors the guidelines and methodologies for the control of the liability portfolio Risk Management Guidelines Liquidity FX Interest Rates Maximum of 20% of debt with exposure to a foreign currency Maximum 70% in variable rate and minimum 30% in fixed rate. Maximum amortization per year should be 15% of total debt with a deviation up to 18% — Minimum average life of 4.15 years

  34. Debt Profile FX Composition Outstanding Debt Payments (percentage per year) Type of debt and currency Interest Composition Source: DDCP - SDH

  35. Debt Ratios • The District strictly monitors the incurrence of indebtedness in order to match the financing needs resulting from the implementation of new programs and its future revenues Total Debt / GDP

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