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Colombia's Finance Minister Miguel Gómez outlines a 3-stage fiscal austerity plan, including budget reform and a potential IMF loan, as the country faces growing deficits and reconstruction costs after an earthquake.
The Minister of Finance, Miguel José Gómez Martínez, explained in a joint press conference with the manager of the Bank of the Republic that the Government has proposed a strategy of fiscal adjustment and austerity in three stages.
Colombia fiscal adjustment strategy
The Government of Colombia stated this Wednesday that its conversations with the International Monetary Fund (IMF) are mainly linked to the fiscal adjustment that the Executive intends to carry out. The first stage would begin with the discussion of the budget for 2027, which is currently in the parliamentary process without setbacks and would be put to a vote by the plenaries between October 13 and 15.
Next, as a second stage, the so-called rescue law would arrive, a project in which, according to Gómez, the Executive has been working for several weeks and hopes to file it in Congress "in about ten or twelve days". The minister did not provide more details on this, pending the approval of the budget.
Finally, the National Development Plan would arrive, which according to the Minister of Finance could also include measures with an impact on the size of the State and the sustainability of its finances. On the other hand, the manager of the Bank of the Republic (central), Leonardo Villar, conceded that the monetary authority "views with good eyes" that the Colombian Executive is in conversations with the IMF and seeking to sanitize the situation of public accounts.
Bank of Republic stance
Villar added that the issuing body is willing to support the necessary efforts if decisions are subsequently made on specific programs, loans or other matters related to the IMF, but clarified that for now it does not have more elements to comment on those conversations.
"Negotiation is not being dealt with on the bank's instruments," the manager stated, who also ruled out that the process is aimed, in principle, at supporting the international reserves of the Bank of the Republic, which he considered "sufficiently large". The president of Colombia, Abelardo de la Espriella, announced by surprise last Sunday his decision to appeal to the IMF - in a public address -, in which he assured that the country is in its "most critical" situation and that these contacts seek "a negotiated solution to the crisis".
"Public finances, compatriots, cannot take it anymore. The balance is in the red," the president stated. That weekend, several representatives of the Colombian government met in Bogotá with the deputy managing director of the IMF, Nigel Clarke; including the vice president, José Manuel Restrepo, the minister Gómez, and Villar himself.
Rising fiscal deficit projections
The fiscal deficit in 2025 was 6.4% of the gross domestic product (GDP), close to the maximum of recent years (without counting the exercises during the COVID-19 pandemic): 6.7% in 2024. The Bank of the Republic recently warned that, without corrective measures, this year's deficit could increase to 7.4% and reach 9.4% in 2027.
Reconstruction after the great earthquake of August 10 - which could cost between $9.5 billion and $14 billion, according to various estimates - will further narrow the Government's fiscal margin. On the other hand, public debt could close the year above 66% of GDP, according to the Bank of the Republic.
Colombia Fiscal Crisis IMF Negotiations Budget Reform Public Debt Earthquake Reconstruction
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