Colombia Declares Economic Emergency Amidst Budget Crisis

Colombia's government has declared an economic emergency allowing the President to issue taxes by decree, after failing to pass a tax bill that would increase the budget by USD 4 billion. The measure aims to cover healthcare, military expenses, and infrastructure investments, but faces legal challenges and opposition.

In response to mounting fiscal pressures, Colombia's government has announced an economic state of emergency, granting President Gustavo Petro's administration the power to impose taxes by decree. The move comes after the government failed to secure congressional support for a tax bill designed to bolster the nation's budget by USD 4 billion by 2026.

Proposed measures aim to address critical areas such as healthcare, military funding, and infrastructure, while also planning new wealth taxes on businesses and individuals, along with increased sales taxes on alcohol. However, critics, including Colombia's National Association of Industrialists, view the decree as an overreach, potentially bypassing legislative checks and balances.

The decree's legality is under scrutiny, as opponents argue the economic conditions do not meet the legal threshold for such a declaration. As the Colombian Constitutional Court considers these concerns, experts like economics professor Jorge Restrepo question whether the current situation was truly unexpected, given the known fiscal crisis.

(With inputs from agencies.)