Colombia's Revised Fiscal Path: Deficit Projection Lowered

Colombia's fiscal rule committee adjusted the 2025 fiscal deficit projection to 6.2% of GDP from 7.1%, reflecting effective debt management by the Finance Ministry. The primary deficit forecast is now at 3%, still above government targets. Operations like swaps and buybacks reduced interest payment costs amid weakening finances.

The Colombian fiscal landscape saw a positive shift as the independent fiscal rule committee revised the 2025 fiscal deficit projection to 6.2% of GDP, down from a previous target of 7.1%. This adjustment also falls below the earlier projection of 6.7% set at the beginning of the month.

The committee, known as CARF, oversees adherence to fiscal regulations structured to curb excessive debt and deficits. It attributed the revised forecasts to strategic debt management maneuvers by the Finance Ministry, which have successfully reduced the burden of interest payments.

Despite significant progress, the primary deficit, which excludes interest payments, is projected at 3% of GDP, slightly higher than the government's target. The Finance Ministry's initiatives, including domestic and international debt management strategies like swaps and buybacks, aim to tackle the challenges posed by weakening public finances.

(With inputs from agencies.)