Business · Economy · 3 hrs ago
Colombia plans deep spending cuts as investors back South American right
Colombian President Abelardo de la Espriella plans $14 billion in cuts for 2027, equal to 2.2% of the country’s economy.
He is due to send the plan to Congress, which is deeply divided.
The government projects a 9.4% deficit in 2027 if no action is taken, including costs from an August earthquake.
Even if lawmakers approve the cuts, Colombia says it will need foreign financing and has sent officials to Washington to seek a loan from the International Monetary Fund.
Argentina’s Javier Milei offers a precedent: after taking office in 2023, his government cut spending sharply and moved from a primary deficit to a surplus by the end of 2024.
Inflation fell and the currency strengthened, but poverty reached nearly 53% in 2024 before declining to 32.3%.
The fiscal turn can win investor approval but bring social costs, and Colombia’s plan still depends on congressional approval and outside financing.
Colombian President Abelardo de la Espriella plans to send Congress a fiscal recovery plan with spending cuts of US$14 billion, or 2.2% of GDP, in 2027.
The proposed cut would be the largest one-year spending reduction in Colombia’s history.
The government projects a fiscal effort equal to 4.5% of GDP in 2028 through spending cuts and increased revenue.
Colombia’s projected fiscal deficit is 7.2% of GDP in 2026 and a record 9.4% in 2027 if no action is taken.
The plan faces a deeply divided Congress, and Colombia will need external financing to close its accounts.
- Who
- Colombian President Abelardo de la Espriella.
- What
- His government plans spending cuts of US$14 billion in 2027 as part of a fiscal recovery plan.
- When
- The plan is due to be sent to Congress; the proposed cuts are for 2027.
- Where
- Colombia.
- Why
- The government faces large projected fiscal deficits and needs to restore its public finances.
This story does not have two clearly opposing sides.
Abelardo de la Espriella won Colombia’s presidential election by a narrow margin.
An earthquake struck Colombia, causing damage that added to projected public spending.
The government raised its projected 2026 fiscal deficit to 7.2% of GDP and presented a 2027 budget projecting a 9.4% deficit if no action is taken.
The government plans spending cuts equal to 2.2% of GDP.
- Planned spending cuts
- US$14 billion, or 2.2% of GDP, in 2027
- Projected 2028 fiscal effort
- 4.5% of GDP through spending cuts and increased revenue
- Projected 2026 deficit
- 7.2% of GDP
- Projected 2027 deficit
- 9.4% of GDP if no action is taken
- President
- Abelardo de la Espriella
1 source
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What people are saying
Look what Milei did!