Colombia Proposes Emergency Economic Decree to Bolster 2026 Budget

Colombia's government plans to unveil an economic emergency decree to raise 16 trillion pesos for the 2026 budget after Congress rejected a proposed tax reform. The move aims to secure funding without changing the core tax structure despite the country's worsening fiscal situation.

Colombia's government is set to introduce an economic emergency decree this Friday to amass approximately 16 trillion pesos, equivalent to $4.13 billion, to finance portions of the 2026 budget. This initiative follows Congress's refusal to pass a 16.3 trillion-peso tax reform bill, crucial for funding next year's expenditures.

At a press conference, Finance Minister German Avila announced, "We are finalizing an alternative for declaring an economic emergency." He further clarified that the envisioned funds will adhere to the framework of the previously presented financing law, aiming to collect fundamentally the same taxes.

Following the tax reform's dismissal, the government is under pressure to either cut the 546.9 trillion peso budget for the coming year or identify new funding sources to replace the rejected reform. Economic challenges persist, with Colombia's fiscal deficit target revised to 7.1% of GDP from an initial 5.1%, leading to lowered sovereign credit ratings by major agencies.

(With inputs from agencies.)