(Bloomberg) -- Colombia’s top finance official said that cutting the high cost of fuel subsidies is a more pressing concern than renegotiating an agreement with the International Monetary Fund. 

The debt caused by subsidies is a “much bigger” worry than the nation’s debt with the IMF, Finance Minister Ricardo Bonilla said, speaking on the sidelines of the annual meetings of the IMF Fund and the World Bank Group in Washington D.C. 

In 2020, Colombia borrowed around $5.4 billion from the IMF, becoming the first country ever to tap a so-called flexible credit line with the Fund. President Gustavo Petro said last week that he wants to renegotiate this agreement to create “a larger financing space” for social spending.

Bonilla said he’ll seek a meeting with IMF managing director, Kristalina Georgieva, after the events are over. Many analysts think there is little prospect of Colombia getting better terms. 

Read more: Petro Says He Will Renegotiate Colombia’s Debt With IMF

Since taking office in 2022, the Petro government has phased out gasoline subsidies, but has yet to allow a sharp increase in diesel prices, which would raise the cost of freight and public transport and also antagonize powerful truckers’ organizations.  

The government forecasts the fiscal deficit will widen this year to 5.3% of gross domestic product, from 4.2% in 2023. An independent committee that oversees compliance with the balanced budget act, known as the fiscal rule, warned that it’s at risk of not being met.

©2024 Bloomberg L.P.