BOGOTA, June 4 Reuters A collapse in Colombia39;s tax collection is setting off alarm bells for the market, which says the government will need to contend with an estimated budget shortfall of some 27 trillion pesos, about 6.9 billion, this year.

Finance Minister Ricardo Bonilla has predicted fiscal adjustments in the fourth quarter, but analysts said changes will need to come sooner, lest the country miss fiscal targets or ratings agencies take notice.

Tax collection fell 40.9 in April to 4.83 billion, taking the overall shortfall to about 2.85 billion in the first four months of the year compared to the target.

The DIAN tax agency has already said the country will not meet targeted collection of nearly 2.6 billion from arbitrations during 2024, and a court decision allowing extractive companies to continue deducting royalties from their taxes will also hit public coffers.

The fiscal situation is worrying, both at the level of spending and of income, said Andres Abadia, head economist for Latin America for Pantheon Macroeconomics. The economy will have to pay for it.

The government will need to make adjustments in its midyear fiscal plan in midJune if it wants to avoid a crisis in investor confidence, analysts said.

The finance ministry did not respond to requests for comment.

Various market sources who spoke to Reuters said the government faces a dilemma when trying to react to lowerthanexpected income should it significantly reduce spending, take on more debt…