2026/06/16 | Vittorio Peretti, Carolina Monzón, Juan Robayo & Angela Gonzalez
The fiscal outlook remains challenging. The MoF maintained its 2026 GDP growth forecast at 2.6% of GDP (Itaú: 2.1%) and expects a deceleration to 2.2% in 2027 (Itaú: 2.3%). The medium-term growth forecast was set at 2.9% (unchanged from last year's framework). Inflation for 26YE was revised up by 0.2pp to 6.0% (Itaú: 7.0%) and 4.4% by 27YE (Itaú: 5.7%). A 1.2% stronger USDCOP, relative to the February financial plan (COP3,801), would continue to contain interest payments on external debt at 3.3% of GDP in 2026. However these are projected to increase to 4.4% of GDP in 2027. Meanwhile, the oil price forecast increased to USD85.5 from USD59.2 in February’s forecast. According to the updated projections, an increase in oil prices of USD 10 would improve the primary and total balances by COP 0.8 trillion in 2026 and COP 1.7 trillion in 2027. Conversely, a depreciation in the exchange rate of COP 100 would result in a increase in debt of 0.4% of GDP.
Primary deficit forecast was maintained at 2.1% of GDP in 2026 (Itaú: 3.3%). The MoF foresees fiscal consolidation will continue in 2027 with a primary deficit decrease down to 0.5% of GDP in 2027 in line with the fiscal rule (Itaú: 2.8%). However, the MoF acknowledges the need of approval of an ambitious tax bill of COP30 trillion (1.5% of GDP) next year. The document highlights that the fiscal rule compliance requires an average primary surplus pf 1.2% of GDP in the medium term.
The MoF continues to expect a decline in the nominal fiscal deficit to 5.3% of GDP in 2026 (previously 5.1%) and 4.5% in 2027, with stable net debt over the forecast horizon. Overall, net debt is expected to maintain broadly stable at 58.9% of GDP this year (compared to 58.6% in 2025), which is above the anchor of 55%. The MoF expects net debt to remain unchanged at 58.9% of GDP in 2027, assuming convergence to 57.3% of GDP by 2037 , with a peak of 59.6% of GDP expected in 2029. The document stresses that, in the absence of the executed debt management operations, debt would have peaked at 63.8% of GDP by 2027.
Financing through Treasury operations in both 2026 and 2027. The government now targets USD 8.3 billion in external financing for 2026 (1.6% of GDP; USD 1.6 billion less than the previous estimate), accounting for 26% of total financing (compared to 73% local and 36% foreign in the February fiscal plan). Treasury operations increased by COP 9.8 trillion up to 17 trillion and account for 0.8% of GDP. Meanwhile, internal financing remained unchanged at COP 85.2 trillion (4.2% of GDP). For next year, the MoF is aiming for USD 6.7 billion of external financing and similar levels of internal financing of COP 84 trillion and even slightly higher Treasury operations for COP20 trillion (1.0% of GDP). Final cash is to remain at low levels at COP7 trillion (0.4% of GDP) for both 26YE and 27YE.
Our Take: The official forecasts reflect Colombia’s challenging fiscal outlook, with persistent revenue disappointments and rigid expenditures. We forecast a 6.5% of GDP nominal deficit in 2026, then down to 5.8% GDP in 2027 (6.4% of GDP in 2025).