Market Update: We break down the business implications, market impact, and expert insights related to Market Update: Colombia economic outlook | Deloitte Insights – Full Analysis.
Colombia’s fiscal framework projections
According to the Medium-Term Fiscal Framework, published by the Ministry of Finance and Public Credit in mid-2025, a deterioration was observed in most macroeconomic assumptions compared to the ministry’s Financial Plan released earlier in the year.14 In particular, projections for central government revenues and expenditures worsened, implying a potential increase in the fiscal deficit.
The only two assumptions that did not deteriorate were the annual GDP growth rate, set at 2.7%, and year-end inflation, projected at 4.5%. Although economic activity has accelerated during 2025, cumulative growth for the first two quarters stood at 2.4% year on year, while inflation reached 5.1%, suggesting that the ministry’s assumptions in the medium-term framework may have been slightly optimistic. Consequently, the fiscal deficit at year-end could exceed the 7.1% share of GDP projected in the framework, primarily due to lower-than-expected tax revenues.
It is important to note that a deficit of 7.1% does not comply with the fiscal rule. As a result, the government has activated an escape clause embedded in the constitution, temporarily suspending fiscal rule application.
The objective of this suspension is to ensure compliance with fiscal obligations that were at risk due to rigidities in public spending, with the intention of subsequently normalizing the deficit trajectory. However, the implementation of the country’s new pension system, which took effect in July 2025, and changes to the general participation system will increase spending pressures in the future. Without offsetting reductions in other expenditure categories, it will be difficult to return to a moderately low deficit level that does not entail higher debt.