Colombia Faces Budgetary Challenge Amid Fiscal Concerns

Colombia's Autonomous Fiscal Rule Committee indicates a need for an additional 40 trillion pesos ($9.2 billion) budget adjustment amid fiscal challenges. The statement follows government spending cuts and a rejected tax reform aimed at stabilizing public finances under President Gustavo Petro.

Colombia will require an additional adjustment of 40 trillion pesos ($9.2 billion) to its budget this year due to ongoing fiscal issues, according to the Autonomous Fiscal Rule Committee (CARF). This announcement comes despite earlier government spending cuts.

In November, President Gustavo Petro's administration reduced spending by 28.4 trillion pesos ($6.5 billion) as a response to lower-than-expected tax revenues. The CARF now estimates that maintaining fiscal spending in line with the fiscal rule of 289 trillion pesos necessitates extra measures amounting to about 40 trillion pesos.

The fiscal rule, established in 2011, serves to prevent the decline of public financial health. This month, lawmakers rejected a $2.2 billion tax reform that the government had positioned as essential for financing future budgets, including the one planned for 2025.

(With inputs from agencies.)