Colombia: Fiscal adjustment set to take center stage

Research evidence excerpt

J P M O R G A N

Latin America Economic Research

16 September 2026

Colombia

Fiscal adjustment set to take center stage

Fiscal data through 1H26 show no sign of consolidation, with the primary

fiscal deficit reaching 1.2% of GDP

Emerging Markets Economic and

Policy Research

Real revenue growth slowed sharply in 2Q, and DIAN’s high-frequency

data through July point to continued weakness

Juan Goldin

The spending pace accelerated through the electoral period, with real

spending up 4.5%oya in 2Q

A positive development is that marginal data through August, which

capture less than a month of the De la Espriella administration, point to

some moderation in spending dynamics

Our primary-deficit proxy is tracking 1.7% of GDP through August,

versus 1.9% over the same period last year

Colombia has faced a prolonged deterioration in its fiscal accounts, a trend

consistent with increasing financing needs, leaving the economy more exposed to

a potential tightening in global financial conditions. The new administration, in

office for just over a month, has made transparency a central part of its initial

approach, submitting an updated 2027 budget bill to Congress that revises both the

fiscal outlook and Treasury financing needs for this year and next, and has placed

consolidation at the core of its medium-term strategy. On the legislative timeline,

the congressional economic committees have already approved the 2027 budget

envelope, with the discussion now moving to the plenary sessions of Congress.

Lawmakers have until October 20 to approve the bill. Regarding the Fiscal

Adjustment Law ("Ley de Rescate Económico"), Hacienda has indicated that it

intends to submit the proposal to Congress in October, although no details have yet

been disclosed.

The updated figures suggest that, absent additional spending restraint and revenueenhancing measures, the primary deficit would remain above 4% of GDP in both

years, while interest costs have also been revised higher. Encouragingly, the

administration has signaled its intention to place fiscal consolidation at the center

of its medium-term strategy by gradually reducing the primary deficit over the

projection horizon.…