BOGOTA (Reuters) - Colombia's congress approved an $80 billion budget for 2018 on Wednesday, in a bid to retain the country's 'BBB' credit rating, and the finance minister said the government would not issue more international bonds.
Policymakers have been grappling for over two years with the twin pressures of a weak economy, caused by the global drop in oil prices, and inflation that at one point last year was more than double the bank's 2 percent to 4 percent target range.
The budget is a 1 percent increase over this year's spending.
Education will benefit most in the 235.5 trillion peso plan, with funding of 37 trillion pesos, followed closely by the defense sector with 31 trillion pesos.
The country will also spend 2.4 trillion on post-conflict projects, as it continues to implement a peace deal with the Revolutionary Armed Forces of Colombia (FARC) rebel group.
The plan is the final budget for the administration of President Juan Manuel Santos, who will leave office in August 2018.
The government considers the plan to be an austerity budget, a bid to reduce spending amid falling growth, which it says will reach 2 percent this year.
Ratings agencies and analysts are less optimistic however and see a high probability that the country may not meet its goals. Respondents in a recent Reuters survey estimated growth of only 1.6 percent.
The government is aiming for a fiscal deficit of 3.1 percent in 2018, down from the 3.6 percent expected for this year.
The Santos government will not issue any more international bonds, Finance Minister Mauricio Cardenas told journalists after the congressional vote, but is making efforts to reduce its foreign debt.
"We don't need more financing from the international markets and we have reduced our borrowing requests with multilateral banks," Cardenas said.
The government has said it will use $980 million in fines being paid by telecom companies for some expenses in 2018.
It had previously planned to raise $2.5 billion in financing from bonds and $1.5 billion in multilateral bank loans for the 2018 budget.
In August the government pre-financed some $900 million of its needs for next year with a bond issue that comes due in 2027.