Littérature scientifique sur le sujet « France War profits tax »

The international experience in reforming income taxation systems in war and post-war conditions is summarized, in particular, approaches to reforming income taxation systems in the USA, Sweden, Denmark, France and Great Britain are compared. Considered examples demonstrate that despite the low budget efficiency of wealth taxes in many countries of Europe and the world (they did not bring considerable budget revenues and at the same time required significant administrative costs), excess profits taxation has been widely practiced for a long time even after the end of the war, in particular, in the post-pandemic period and during the current energy crisis in the EU countries. Main views are systematized regarding individual wealth taxation – not so much as a threat of capital outflow and disincentive for capital investments but as an important component of the tax system, which, coupled with other income and property taxes, contributes to the restoration of wealth distribution equality and minimizes opportunities for tax evasion. Attention is focused on the application of excess profits tax by the EU countries as a temporary European solidarity contribution in response to the global socio-economic crisis caused by the negative consequences of the COVID-19 pandemic and the increase in energy prices due to the military aggression of the Russian Federation. The key requirements that individual wealth tax must meet to be introduced in Ukraine are substantiated. They include establishing a tax exemption threshold at a high level, as well as extending it not only to the residents of Ukraine, but also to the citizens of other countries who own assets on its territory, in order to increase the tax’s progressivity and budgetary efficiency.

Investigating the legality? Ha ha ha! That cracks me up. There is no international law that would prohibit this action by the Defense Department, nor is there any international court that France may appeal to. I of course think that this is the correct decision. Those countries who did not help win the war – who did not pay the price in blood – have no claim to the postwar profits. – Mike, Why I'm Right, Internet ForumDuring the Reagan administration, I helped negotiate … the “GATT Government Procurement Code”, later incorporated into the World Trade Organization's legal framework. The U.S. was the primary force behind this legal agreement. It was not motivated by altruism, but out of a belief that all signatory governments … and their respective tax payers would benefit from basing practices on economic factors rather than national favoritism. - Gene Tuttle, in responseInfrastructure in Iraq lies in tatters. Unscrupulous exploitation by Saddam Hussein's dictatorial regime, burdensome economic sanctions and massive destruction during the U.S.-led military operation ‘Iraqi Freedom’ have turned Iraq into one of the world's most destitute countries. On the UN Human Poverty Index for 2003, Iraq ranks seventy-first out of ninety-six developing nations. The reconstruction of basic infrastructure is but one first step towards development and economic growth. Rebuilding Iraq's infrastructure, however, involves substantial economic interests. After all, the cake to be distributed for rebuilding Iraq is expected to exceed $100 billion. Some companies see on the horizon one of the most rewarding business opportunities “undertaken in over 50 years” At the same time, there is a growing suspicion that political or even personal biases of the United States' administration have a bigger role to play than economic reason when it comes to sharing the cake. In December 2003, Deputy Secretary of Defense, Paul Wolfowitz, announced that some of America's trading partners, among them Canada, France, Germany and Russia, would be altogether excluded from competition for major reconstruction projects in Iraq. Public opinion in Europe was quick to brand the United States an international law-breaker. Can one State simply reserve to itself the final word on the Iraqi reconstruction money?

The paper draws attention to one of the emergency taxes in the history of the Polish Treasury, i.e. a tax on war profits. It was levied under the Decree of 5 February 1919 on the Establishment of a Tax on War Profits. This levy introduced a concept which was developed in Europe and built on the First World War experience. In the reborn Poland, the tax was supposed to have two functions: fiscal — as a source of financing the extraordinary expenditure arising from the war against the Soviets and a social function — as an additional burden on those taxpayers who were able to accumulate wealth and earn substantial profits as a result of the First World War.

Subject. The article discusses excess profits of Russian banks in the amount of the planned Federal budget deficit in 2023, and financial relationships between banks and the budget as causes of excess profits. Objectives. The focus is on fairer taxation of commercial banks, using the case of the largest of them, and based on the latest experience of other countries. Methods. The study employs the comparative analysis of other countries’ practice on modifying the taxation of super profits of banks, financial analysis of reports of the largest banks regarding the specifics of the main taxes. Results. The article shows a zero net impact on the budget from bank operations. Budget payments by banks include income tax, tax on dividends, dividends to the State owned shares. Indirectly banks pay VAT on interest on corporate loans, interest on treasury funds in banks. Payments from the budget to banks include OFZ coupons and interest rate subsidies, banks earn margin on the treasury funds, zero VAT tax expenses on bank transactions with individuals. The international experience shows that other countries actively modify taxes on banks’ super profits. Italy and Spain introduced special taxes on banks, Brazil – a tax on financial transactions, Germany and Britain raised income tax rates, the U.S. regularly collect multi-billion dollar fines, France levies VAT on banks and encourages the European Union to do so. Conclusion. The fiscal effect of my proposals is about 1 trillion rubles, or one-third of the budget deficit. I offer to abolish zero VAT on bank operations with individuals, based on excess profits of banks, social inequality, and digitalization of tax control. Income tax for banks should be a minimum of 1% of risky assets, and it can be used to directly subsidize interest rates at the level of specific banks.

The article notes that in the context of globalization, multinational corporations exert an increasing influence on the economies of their home countries, host countries, and the overall state of international economic relations. The authors underline that tax planning is one of the TNC activities that grabs attention of the global public in terms of both its favorable and unfavorable effects. The article offers its own definition of the term «tax landscape», in which, unlike the existing ones, vertical, horizontal and temporal aspects are distinguished. The vertical aspect is presented as a synthesis of the supranational level of taxation and the national one; horizontal, as a system of tax rules and laws within a separate state; temporal, as a change in the main elements of taxation over time. It has been proven that at the current stage of formation of tax landscapes to characterize the supranational level, it is necessary to take into account the elements of taxation defined as part of the implementation of the international BEPS project: the global minimum tax, tax rates for surplus profits, and surplus profits as an object of taxation. The authors have been able to divide the studied countries into three groups depending on the level of direct taxation: high (United States, Canada and Australia), moderate (Great Britain, France, Italy, India, Germany and Switzerland), and low (China and Saudi Arabia). The first group (the United States) and the second group (the United Kingdom, Germany, France, Switzerland, and Italy) have been found to have the greatest tax losses as a result of «tax havens.» The level of direct taxation (profit and capital) in the countries of registration and countries of digital presence, the volatility of tax legislation, and compliance with the conditions of tax justice have been proposed as factors of the tax landscape to be taken into account by transnational corporations when developing tax planning strategies.

ABSTRACTState measures to confiscate the ‘illicit profits’ earned from commerce with the enemy and the black market in Occupied France are generally considered to have been an abject failure. Economic collaboration and illicit commerce had been widespread. The need to ‘purge’ the profits from black market transactions and economic collaboration was considered essential at Liberation. An examination of the confiscation effort from archival sources shows that the purge achieved limited success, but that complete success was rendered impossible by factors that limited other post-war purges: the shortage of trained personnel and investigative resources, the need for hard evidence for legal procedures (rather than vigilante justice), the efforts of collaborators to cover their tracks, and the evolution of public opinion, which was quickly disappointed by the slow pace of confiscations. Although success was limited, the effort to punish the profiteers it could convict had been necessary, as a matter of elementary fiscal justice and an essential step in the restoration of the authority of the state.

Introduction. The development of the taxation theory and the best practices of the World Anti-crisis Tax Policy prove the gradual separation of an independent and very specific group of taxes, called “solidarity taxes”, which are beginning to play a fairly significant role in modern tax policy. The intensive development of solidarity taxes and their implementation in the European fiscal space in 2022 are closely related to the crisis phenomena that have arisen in the field of energy prices and the associated increase in the inflation rate. This is one of the consequences of the military aggression of the Russian Federation against Ukraine. Another consequence of this war was the high need for investment necessary for the revival of Ukraine. Problem Statement. The problems of the design of solidarity taxes and their scope of application, as well as the possibilities and features of their use as a promising source of investment financing, remain insufficiently studied. And the latest experience of the second half of 2022-early 2023 regarding the coordinated application of taxes on unpredictable profits in EU countries requires critical analysis and generalization. Purpose. To study the economic content, evolution and regulatory framework of the application of solidarity taxes in the EU and the prospects for their implementation in Ukraine at the stage of post-war economic recovery. Methods. The author used analytical and qualitative research methods, including logical and comparative analysis, to identify general and special features of solidarity taxes, decomposition and grouping methods to study the element base and identify models of the studied taxes. Results. The theoretical basis and European practice of using solidarity taxes are analyzed, and the genesis of their development in the EU countries is studied. The principles of development and implementation of a common tax policy within the EU to counteract the consequences of the energy crisis through the introduction of a temporary contribution of solidarity, coping with unexpected profits in the energy sector and oil refining are considered. Attention is focused on the expediency, limitations and risks of the prospective application of solidarity taxes as its own source of investment financing at the stage of the post-war economic recovery of Ukraine. Conclusions. Solidarity taxes implementation is a promising direction for creating our own national sources of investment financing in the context of the post-war economic recovery. The introduction of solidarity taxes in Ukraine requires the adaptation of the European methodology to the specifics of the set goals and conditions of taxation in Ukraine, as well as scientific justification of restrictions on the application of this tax and preventive mechanisms to counteract the negative consequences of its implementation.

Résumé : L’imposition des bénéfices des entreprises en France et au SénégalL’objectif de toute politique fiscale est de répondre à des préoccupations économiques et sociales. Le phénomène de la mondialisation des échanges a très rapidement modifié les relations entre les systèmes fiscaux nationaux. Aujourd’hui avec l’interpénétration des économies, les États ne peuvent plus ignorer la nécessité d’agir de concert vers une convergence des systèmes fiscaux. Mais la France et le Sénégal n’ont pas attendu l’apparition du phénomène de la mondialisation pour se rapprocher juridiquement et fiscalement. En effet, l’histoire de la colonisation ne s’est pas construite en dehors de la trajectoire fiscale. Ressource d’enrôlement, de contrôle des indigènes, la fiscalité a été le canal historique de l’imposition et de légitimation des ordres coloniaux. S’il existe des similitudes et des différences dans l’imposition des bénéfices des entreprises entre les deux États, c’est tantôt dû à l’héritage colonial, dans ce cas, le mimétisme fiscal a un sens, tantôt dû à la protection jalouse de leur souveraineté, dans ce cas chaque État cherche à spécifier sa législation fiscale et une dissociation nouvelle s’impose. Contrairement au système dit de la mondialité pratiquée par la majorité des pays, la France et le Sénégal font figure d’exception en choisissant d’imposer leurs entreprises selon le principe de territorialité. Ils appliquent au traitement fiscal des résultats de leurs entreprises un principe identique d’imposition des bénéfices aux plans des règles d’assiette, de liquidation et de recouvrement. Toutefois, il reste possible de mettre en valeur d’une part, les différences au niveau des assiettes et des recettes fiscales, d’autre part la concurrence des mesures fiscales incitatives en droit national et des mesures préventives prise en droit conventionnel afin d’éliminer les doubles impositions.Mots clés : Impôt, Entreprise, Territorialité, Convention fiscale
Summary: Companies benefits taxes in France & Senegal The aim of all fiscal policy is to answer to economic and social concerns. Relationships between national fiscal systems were very quickly modified by the exchanges globalization phenomenon. Today, with economies interdependence, States can't ignore the urgent necessity to harmonise fiscal systems anymore. Still, France & Senegal didn't wait for this phenomenon to converge their systems in a legal and fiscal way. Indeed, History of colonization didn't made itself without any fiscality. Enrollment ressources, control of the indigenous, fiscality was the historical channel that imposed and legitimated colonial orders. Similarities and differences in companies benefits imposition remains between the two States. Sometimes, it's because of the colonial legacy. In that particular case, fiscal mimesis makes sense. In an other hand, due to the jealous protection of their sovereignty, each State wants to specify its fiscal legislation; a new dissociation appears. Unlike the so called Mondiality system, used by the majority of the countries, France & Senegal make an exception by deciding to tax their companies on the territoriality principle. They apply an identical principle to the fiscal treatment of the companies results, in terms of benefits taxes, collection, fiscal base, and liquidation. However, it remains possible to diaplay differences between fiscal bases, and on the other hand the competition of incentives fiscal measures in national law and the preventive measures took in conventional law in order to eliminate double taxes.Keywords: Tax, Company, Territoriality, Tax Convention

À l'intérieur d'un État, la distribution des ressources publiques sur le territoire a une importance fondamentale, parce qu'elle représente un facteur de justice dans les rapports entre collectivités territoriales, de sorte qu’elle conditionne la capacité à assurer les charges liées à l’exercice de leurs compétences, dans le respect de leur autonomie, au profit des habitants qui doivent pouvoir bénéficier d’une qualité minimale des services publics. Cette thèse vise d’abord à étudier et à comparer quelle est l’influence de la forme d’État (unitaire pour la France et fédérative pour le Brésil) sur les mécanismes de la solidarité territoriale. Elle se propose de décrire et d’analyser l’efficacité des mécanismes plus importants (financiers : impôt local, dotations, fonds et transferts facultatifs ; coopératifs : institutions représentatives, politiques publiques nationales, mutualisation et contrats entre collectivités territoriales) mis en place, dès le prélèvement des impôts (nationaux ou locaux), en passant par les incitations fiscales, jusqu’au transfert des ressources aux bénéficiaires. Toute d’abord par une description de l’évolution historique qui explique l’organisation territoriale et la naissance des mécanismes de solidarité actuels, puis en montrant les inégalités importantes qui existent, principalement entre communes pour, enfin, finir avec une analyse prospective de l’efficacité et des défauts (guerre fiscale, corruption et évasion fiscales) de ces mécanismes qui visent à réaliser une péréquation (verticale ou horizontale) des ressources publiques
Within a state, the distribution of public resources inside the territory have a fundamental importance, because it represents a factor of justice in the relationship between local authorities, so that it affects the ability to provide their obligations related to the exercise of their powers in respect of their autonomy, in benefit of citizens who need to have a minimum quality of public services. This thesis aims first to examine and compare what is the influence of the form of state (Unitary for France and Federal for Brazil) on the mechanisms of territorial solidarity. It aims to describe and analyze the effectiveness of the most important mechanisms (financial: local taxes, grants, funds and discretionary transfers; cooperative: representative institutions, national public policies, pooling and contracts between central state and local authorities). Firstly with a description of the historical evolution of territorial organization and the birth of the current solidarity mechanisms and showing the significant existant inequalities, moreover among municipalities, to finally end up with a prospective analysis of effectiveness and defects (tax war, corruption and tax evasion) of these mechanisms designed to achieve equalization (vertical or horizontal) of public resources

The war against Germany was perceived by the majority of English Canadians as a necessity to defend the British Empire, democracy and justice. However, it became increasingly evident to the public that some individuals were being permitted to prosper, while others — particularly those of the working class — endured immense hardship. These individuals who prospered at a level judged excessive became known as "profiteers." Initial criticisms of profiteering were connected to graft, jobbery and patronage apparent in government military purchases. However, as public sacrifices intensified, the morally acceptable extent to which individuals and businesses could profit came to be more narrowly defined. Criticisms of profiteering expanded to challenge the mainstream liberal notions of private wealth and laissez-faire policies as being inequitable and undemocratic. The federal government's unwillingness to seriously implement measures against profiteering led to rising discontent. Consequently, working-class English Canadians aspired to form a 'new democracy' that was worth the sacrifices of the war.
Thesis (Master, History) -- Queen's University, 2013-09-19 19:02:13.077

This chapter presents the effects of the First World War on the future of the British shipping industry. It examines shipping tonnage statistics to demonstrates Britain’s loss of three million tons and in contrast, the worldwide tonnage increase of seven million tons. It is presented in two halves: the first provides overviews of the tonnage profit between 1914 and 1920 in America, Japan, France, and Italy, and the tonnage of neutral countries and British enemies; detailed shipping losses and the financial effects on British shipping; plus tramp and liner statistics, tax rates, freight rates, the lack of equalisation schemes, and the loss of entrepôt trade. The second half examines the British postwar reconstruction effort, and calculates the value of the four major sources of tonnage available: British ships built during the war; ceded German ships; purchases from foreign owners; and new builds. It concludes that Britain sought to return to a prewar perceived sense of normalcy in shipping, despite irrevocable changes in worldwide shipping such as the rise of the American fleet.

The data confirm the presumption that companies prefer to borrow bonds rather than employ short-term debt. The risk of default varies with the specific risk of the individual borrower and the systemic risk which ebbs and flows with the general risk of bankruptcy and thus with the depth and duration of recessions. Despite the large rise in leverage post-war, the cost of debt has been dominated by changes in the long bond yield rather than by those in lending margins. As inflation affects interest rates, profits, and net worth, the relationship between interest rates and leverage needs to use comparable data, which are provided by current values for interest rates and leverage; there is as expected no observable relationship between the level of debt and real interest rates.

Abstract When Louis XIV began his personal rule in 1661 he envisioned restoring order to a society suffering from civil strife, international war, and periodic waves of disease and famine. The society over which Louis XIV cast his gaze was a traditional, preindustrial one, characterized by minute distinctions of status, extremes of wealth and poverty, poor communication networks, low life expectancy, and close economic ties to the land. Legally it was a society characterized by privilege, that is, by an acute consciousness of rank and the practice whereby some groups enjoyed particular rights—tax exemptions, economic monopolies, or favoured access to occupations—denied to others.

Abstract EMPIRE in the 1950s had lost something of its pre-war glamour. Admittedly, it took a dyspeptic, land-locked Swiss to describe its development in these terms: ‘The empire was something with which the French people had nothing whatever to do, and its story was that of machinations of high finance, the Church, and the military caste, which tirelessly re-erected overseas the Bastilles which had been overthrown in France.’ And then, turning specifically to the European settlers in Tunisia, Liithy referred to them as ‘people who have settled like rats in the cheese of the protectorate and have populated every office building, down to the last post office, bank, and tax-office counter, with members of their clan. After the second or third generation nothing European is left about them except their trousers.’.

Abstract In July-August 1914, Europe’s statesmen faced the decision for war against a background of grave internal tensions and dis­ orders, in some instances bordering on civil war. Parliamentary government was on trial, in Britain over Ulster and the strike threat of the Triple Industrial Alliance, in France over the draft law and the income tax, and in Italy over economic and social reform. Germany’s semi parliamentary system floundered because, except for the far-right conservatives and nationalists, the major parties of the Second Empire pressed for the end of Prussia’s three-class franchise and the institution of cabinet responsibility to the Reichstag. The power elite of both halves of the Dual Monarchy was confronted by explosive nationality unrest which itself was an expression of mounting political, economic, and social dysfunctions. In tsarist Russia, meanwhile, the counterfeit Fourth Duma was in no position to blunt the challenge of militant workers and of restless national minorities.

Saudi Arabia backed the Islamization drive by Pakistan’s military ruler General Zia ul Haq, a Sunni. Its official aid to his government was supplemented by contributions from Islamic charities, foundations, mosque collections, and royal princes. When Haq issued a decree in July 1980 for the compulsory collection of religiously enjoined tax of zakat, to be used as charity by the state, Shia leaders protested. They argued that they were required to pay one-fifth of their trading profits to a grand ayatollah of their choice. Haq issued an exemption for Shias. But he and the military’s Inter-Services Intelligence (ISI) directorate encouraged radical elements in the Society of Scholars of Islam organization to form a militantly Sunni group, Sipah-e-Sahaba. It secured additional funding from Riyadh’s General Intelligence Directorate. After igniting anti-Shia riots in Lahore in 1986, it started killing prominent Shias. Militant Shias formed Soldiers of Muhammad group to commit tit-for-tat assassinations. The killing of the Iranian Counsel General in Lahore highlighted the Saudi-Iranian proxy war. In Afghanistan, when Moscow intervened militarily in December 1979, Khomeini condemned it. Iran implemented its own anti-Soviet campaign in Afghanistan while staying clear of the US-Saudi-Pakistani jihad against the Soviet-backed regime in Kabul.

This chapter details the first phase of Henry III's personal rule, between 1234 and 1241, which was the most successful period of his reign. He adopted Edward the Confessor as his patron saint and thereafter drew strength from the Confessor's support. He at last found a bride for himself in Eleanor of Provence, and soon had a son and heir named Edward, after the Confessor. He also gained loyal and clever councillors and an entirely new profile in international affairs. Henry made a statesmanlike settlement with the king of Scots, exploited the resources of Ireland without ever having to go there, gained the county of Chester for the crown and, after the death of Llywelyn, reasserted royal authority in Wales. He appears both as a legislator, concerned with the welfare of his realm, and as a reformer, reordering the finances of the crown. His accommodation with the political community was shown in the concession of a tax by parliament in return for his confirmation of Magna Carta. The relative calm of this period was helped by a long truce with France.

Географический фактор играет двоякую роль в истории Финляндии и ее взаимоотношений с внешним миром. С одной стороны, территориальное положение на окраине Европы обусловило то, что финны сравнительно поздно включились в цивилизационный процесс. С другой стороны, земли, омываемые водами дальних заливов Балтийского моря, находятся в одном из наиболее важных со стратегической точки зрения европейских регионов. Хотя к «финским территориям» издавна проявляли интерес также Англия, Германия и Франция, влияние извне связано для финнов прежде всего с соперничеством ближайших соседей. Политический вакуум, в котором финны пребывали вплоть до начала XI в., пытались заполнить с запада – Швеция и римскокатолическая церковь, с востока – Россия (Великий Новгород) и православная церковь. Первая граница между Швецией и Россией была установлена в 1323 г. Согласно Ореховскому мирному договору Швеция получила юго-западные и западные финляндские территории, Россия – Восточную Карелию. В XVIII в. Россия приступила к поэтапному возвращению финляндских земель, присоединив Финляндию по итогам войны 1808–1809 гг. В границах архиконсервативной Российской империи родилось и постепенно оформилось финляндское государство западного типа. Финляндия получила широкую политическую и экономическую автономию – правительство, четырехсословный орган народного представительства (сейм), налоговую и финансовую систему, свое гражданство, валюту и пр. Финляндию от новой метрополии изначально отделяла таможенная граница. Главой законодательной власти являлся император, управлявший Финляндией на основе коренных законов (конституции) шведского времени. Будучи частью Российского государства, Финляндия постепенно стала политической общностью, а также одним из наиболее экономически развитых регионов империи. Уступки со стороны России были связаны с необходимостью обеспечить безопасность западной границы. The geographical factor plays a twofold role in the history of Finland and its relations with the outside world. On the one hand, the territorial situation on the edge of Europe caused the Finns to join the civilizational process relatively late. On the other hand, the lands washed by the waters of the far reaches of the Baltic Sea are located in one of the most strategically important European regions. Although England, Germany and France have long been interested in the "Finnish territories", external influence for Finns is primarily connected with the hostility of their closest neighbors. It was the political vacuum in which the Finns remained until the beginning of the XI century, that Sweden and the Roman Catholic Church tried to fill from the west, Russia (Veliky Novgorod) and the Orthodox Church – from the east. The first border between Sweden and Russia was established in 1323. According to the Orekhov Peace Treaty, Sweden received the southwestern and western Finnish territories, Russia – East Karelia. In the XYIII century Russia began the gradual return of the Finnish lands, annexing Finland after the results of the war of 1808–1809. Within the borders of the arch-conservative Russian Empire, a Western-type Finnish state was born and gradually took shape. Finland received a wide political and economic autonomy – the government, the four–member body of the People's representation (Seim), the tax and financial system, its citizenship, currency, etc. Finland and the new metropolis were initially separated by the customs border. The head of the legislative power was the emperor, who ruled Finland on the basis of the fundamental laws (constitution) of the Swedish period. Being a part of the Russian state, Finland gradually became a political community, as well as one of the most economically developed regions of the empire. Russia's concessions were determined by the need to ensure the security of the western border.

1. Macroeconomic Summary In December, headline inflation (13.1%) and the average of the core inflation measures (10.3%) continued to trend upward, posting higher rates than those estimated by the Central Bank's technical staff and surpassing the market average. Inflation expectations for all terms exceeded the 3.0% target. In that month, every major group in the Consumer Price Index (CPI) registered higher-than-estimated increases, and the diffusion indicators continued to show generalized price hikes. Accumulated exchange rate pressures on prices, indexation to high inflation rates, and several food supply shocks would explain, in part, the acceleration in inflation. All of this is in a context of significant surplus demand, a tight labor market, and inflation expectations at different terms that exceed the 3.0% target. Compared to the October edition of the Monetary Policy Report, the forecast path for headline and core inflation (excluding food and regulated items: EFR) increased (Graphs 1.1 and 1.2), reflecting heightened accumulated exchange rate pressures, price indexation to a higher inflation rate (CPI and the producer price index: PPI), and the rise in labor costs attributed to a larger-than-estimated adjustment in the minimum wage. Nevertheless, headline inflation is expected to begin to ease by early 2023, although from a higher level than had been estimated in October. This would be supported initially by the slowdown forecast for the food CPI due to a high base of comparison, the end anticipated for the shocks that have affected the prices of these products, and the estimated improvement in external and domestic supply in this sector. In turn, the deterioration in real household income because of high inflation and the end of the effects of pent-up demand, plus tighter external and domestic financial conditions would contribute to diluting surplus demand in 2023 and reducing inflation. By the end of 2023, both headline and core (EFR) inflation would reach 8.7% and would be 3.5% and 3.8%, respectively, by December 2024. These forecasts are subject to a great deal of uncertainty, especially concerning the future behavior of international financial conditions, the evolution of the exchange rate, the pace of adjustment in domestic demand, the extent of indexation of nominal contracts, and the decisions taken regarding the domestic price of fuel and electricity. In the third quarter, economic activity surprised again on the upside and the growth projection for 2022 rose to 8.0% (previously 7.9%). However, it declined to 0.2% for 2023 (previously 0.5%). With this, surplus demand continues to be significant and is still expected to weaken during the current year. Annual economic growth in the third quarter (7.1 % SCA)1 was higher than estimated in October (6.4 % SCA), given stronger domestic demand specifically because of higher-than-expected investment. Private consumption fell from the high level witnessed a quarter earlier and net exports registered a more negative contribution than anticipated. For the fourth quarter, economic activity indicators suggest that gross domestic product (GDP) would have remained high and at a level similar to that observed in the third quarter, with an annual variation of 4.1%. Domestic demand would have slowed in annual terms, although at levels that would have remained above those for output, mainly because of considerable private consumption. Investment would have declined slightly to a value like the average observed in 2019. The real trade deficit would have decreased due to a drop in imports that was more pronounced than the estimated decline in exports. On the forecast horizon, consumption is expected to decline from current elevated levels, partly because of tighter domestic financial conditions and a deterioration in real income due to high inflation. Investment would also weaken and return to levels below those seen before the pandemic. In real terms, the trade deficit would narrow due to a lower momentum projection for domestic demand and higher cumulative real depreciation. In sum, economic growth for all of 2022, 2023, and 2024 would stand at 8.0%, 0.2% and 1.0%, respectively (Graph 1.3). Surplus demand remains high (as measured by the output gap) and is expected to decline in 2023 and could turn negative in 2024 (Graph 1.4). Although the macroeconomic forecast includes a marked slowdown in the economy, an even greater adjustment in domestic absorption cannot be ruled out due to the cumulative effects of tighter external and domestic financial conditions, among other reasons. These estimates continue to be subject to a high degree of uncertainty, which is associated with factors such as global political tensions, changes in international interest rates and their effects on external demand, global risk aversion, the effects of the approved tax reform, the possible impact of reforms announced for this year (pension, health, and labor reforms, among others), and future measures regarding hydrocarbon production. In 2022, the current account deficit would have been high (6.3 % of GDP), but it would be corrected significantly in 2023 (to 3.9 % of GDP) given the expected slowdown in domestic demand. Despite favorable terms of trade, the high external imbalance that would occur during 2022 would be largely due to domestic demand growth, cost pressures associated with high freight rates, higher external debt service payments, and good performance in terms of the profits of foreign companies.2 By 2023, the adjustment in domestic demand would be reflected in a smaller current account deficit especially due to fewer imports, a global moderation in prices and cost pressures, and a reduction in profits remitted abroad by companies with foreign direct investment (FDI) focused on the local market. Despite this anticipated correction in the external imbalance, its level as a percentage of GDP would remain high in the context of tight financial conditions. In the world's main economies, inflation forecasts and expectations point to a reduction by 2023, but at levels that still exceed their central banks' targets. The path anticipated for the Federal Reserve (Fed) interest rate increased and the forecast for global growth continues to be moderate. In the fourth quarter of 2022, logistics costs and international prices for some foods, oil and energy declined from elevated levels, bringing downward pressure to bear on global inflation. Meanwhile, the higher cost of financing, the loss of real income due to high levels of global inflation, and the persistence of the war in Ukraine, among other factors, have contributed to the reduction in global economic growth forecasts. In the United States, inflation turned out to be lower than estimated and the members of the Federal Open Market Committee (FOMC) reduced the growth forecast for 2023. Nevertheless, the actual level of inflation in that country, its forecasts, and expectations exceed the target. Also, the labor market remains tight, and fiscal policy is still expansionary. In this environment, the Fed raised the expected path for policy interest rates and, with this, the market average estimates higher levels for 2023 than those forecast in October. In the region's emerging economies, country risk premia declined during the quarter and the currencies of those countries appreciated against the US dollar. Considering all the above, for the current year, the Central Bank's technical staff increased the path estimated for the Fed's interest rate, reduced the forecast for growth in the country's external demand, lowered the expected path of oil prices, and kept the country’s risk premium assumption high, but at somewhat lower levels than those anticipated in the previous Monetary Policy Report. Moreover, accumulated inflationary pressures originating from the behavior of the exchange rate would continue to be important. External financial conditions facing the economy have improved recently and could be associated with a more favorable international context for the Colombian economy. So far this year, there has been a reduction in long-term bond interest rates in the markets of developed countries and an increase in the prices of risky assets, such as stocks. This would be associated with a faster-than-expected reduction in inflation in the United States and Europe, which would allow for a less restrictive course for monetary policy in those regions. In this context, the risks of a global recession have been reduced and the global appetite for risk has increased. Consequently, the risk premium continues to decline, the Colombian peso has appreciated significantly, and TES interest rates have decreased. Should this trend consolidate, exchange rate inflationary pressures could be less than what was incorporated into the macroeconomic forecast. Uncertainty about external forecasts and their impact on the country remains high, given the unpredictable course of the war in Ukraine, geopolitical tensions, local uncertainty, and the extensive financing needs of the Colombian government and the economy. High inflation with forecasts and expectations above 3.0%, coupled with surplus demand and a tight labor market are compatible with a contractionary stance on monetary policy that is conducive to the macroeconomic adjustment needed to mitigate the risk of de-anchoring inflation expectations and to ensure that inflation converges to the target. Compared to the forecasts in the October edition of the Monetary Policy Report, domestic demand has been more dynamic, with a higher observed level of output exceeding the productive capacity of the economy. In this context of surplus demand, headline and core inflation continued to trend upward and posted surprising increases. Observed and expected international interest rates increased, the country’s risk premia lessened (but remains at high levels), and accumulated exchange rate pressures are still significant. The technical staff's inflation forecast for 2023 increased and inflation expectations remain well above 3.0%. All in all, the risk of inflation expectations becoming unanchored persists, which would accentuate the generalized indexation process and push inflation even further away from the target. This macroeconomic context requires consolidating a contractionary monetary policy stance that aims to meet the inflation target within the forecast horizon and bring the economy's output to levels closer to its potential. 1.2 Monetary Policy Decision At its meetings in December 2022 and January 2023, Banco de la República’s Board of Directors (BDBR) agreed to continue the process of normalizing monetary policy. In December, the BDBR decided by a majority vote to increase the monetary policy interest rate by 100 basis points (bps) and in its January meeting by 75 bps, bringing it to 12.75% (Graph 1.5). 1/ Seasonally and calendar adjusted. 2/ In the current account aggregate, the pressures for a higher external deficit come from those companies with FDI that are focused on the domestic market. In contrast, profits in the mining and energy sectors are more than offset by the external revenue they generate through exports. Box 1 - Electricity Rates: Recent Developments and Indexation. Author: Édgar Caicedo García, Pablo Montealegre Moreno and Álex Fernando Pérez Libreros Box 2 - Indicators of Household Indebtedness. Author: Camilo Gómez y Juan Sebastián Mariño