Colombia‘s MTFF: Less Binding

Research evidence excerpt

Colombia‘s MTFF: Less Binding

IdeaMExhibit 2: The fiscal deficit is revised slightly to the downside (% of GDP)

Source: MTFF 2026, FinMin, Morgan Stanley Research.

Exhibit 3: 2026 GNC financing needs — March PF vs MTFF The financing table is the most market-relevant part of the

MTFF. Total financing needs fall versus March, but not because

the fiscal deficit improves. The deficit to finance actually rises

from COP102.2tn to COP106.5tn. The offset comes from a lower

cash buffer and a sharp reduction in external disbursements.

External borrowing needs fall by about COP12.4tn, while domestic

disbursements remain broadly unchanged. This helps near-term

TES technicals relative to a worse supply scenario, but the

reduction in final cash availability from COP17.6tn to COP7.1tn

lowers the liquidity cushion heading into 2027.

The official framework treats the fiscal problem as difficult but

solvable through a staged consolidation path, structural

revenues, and gradual spending adjustment. Our conversations

with economic teams and local observers suggest a more severe

starting point.

Some argue that the “true” 2026 deficit could be closer to 8.3% of GDP once pending

spending pressures and hidden liabilities are recognized, while debt could be closer to

64.5% of GDP after including budget reserves and off-balance obligations.

The financing table is the most market-relevant part of the MTFF. Total financing needs

fall versus March, but not because the fiscal deficit improves. The deficit to finance

actually rises from COP102.2tn to COP106.5tn. The offset comes from a lower cash buffer

and a sharp reduction in external disbursements. External borrowing needs fall by about

COP12.4tn, while domestic disbursements remain broadly unchanged. This helps near-