The 634.9 trillion pesos that make up the General Budget of the Nation for 2027 generated great surprise among analysts, guilds, and public opinion. There was an expectation that it would be substantially lower, especially after the government of Abelardo De La Espriella insisted on the urgency of applying austerity measures and containing public spending.
This amount is presented at a time when Colombia records the largest fiscal deficit in its history. According to the accounts of the Ministry of Finance, the gap would be 7.2 percent of the gross domestic product (GDP) this year and would reach 9.4 percent in 2027 if no additional measures are adopted.
In light of this scenario, the president of Andi, Bruce Mac Master, assured that this new figure must “be analyzed based on an unavoidable premise: the new administration inherited an extraordinarily serious fiscal situation“.
From that perspective, the real institutional challenge is not only to correct the budget presented by the previous government, but to recognize the true dimension of the accumulated obligations by the State.
Hence, making public finances transparent requires accepting with transparency the real expenses, the outstanding debts, and the true financing needs.
“This will surely show us a more complex fiscal situation than we knew, but a difficult and transparent reality is preferable to seemingly better accounts that hide commitments,” emphasized the guild leader.
Along the same lines, and although the figure caused an initial surprise, the president ofAnif, José Ignacio López, agreed that this exercise of transparency is fully welcome.
The weight of the debt on the new budget
Breaking down the figures, the Ministry of Finance warned that the new proposal incorporates expenses of 23.3 trillion pesos that in the first project — prepared by the administration of former president Gustavo Petro — remained hidden, in addition to a substantially larger item allocated to public debt payment.
The indebtedness, which accelerated during the last four years, was the driver of a public spending that grew increasingly. With the new budget project, the National Government seeks to unmask the accounts to begin toput the house in order.
Precisely, this is the main factor that explains the increase of 59.3 trillion pesos compared to the original project of 575.6 trillion pesos. Of that gap, the commitments for debt service represent 37.4 trillion pesos.
While the outgoing administration announced it would allocate 118 trillion pesos to settle debts, the technical review forced raising the figure to 155.4 trillion pesos. This means that 63 percent of the total increase in the budget corresponds to recognizing the financial obligations that the first text omitted.
For the president of Anif, it was “surprising” how the Gustavo Petro administration managed to “mask the fiscal figures so much”, to the point of “hiding” 37.4 trillion pesos, a figure similar to what is needed to address the reconstruction of the country after the recent earthquake. “A country cannot afford — nor allow a Government — that degree of budgetary irresponsibility,” he affirmed.
This adjustment in the accounts is not due to an administrative whim, but to the need to face a large structural deficit. In the words of the former Minister of Finance, Juan Camilo Restrepo, the current proposal traces a “plausible but unavoidable path to fiscal truth; a path that turns out to be rocky”.
To the revelation of these liabilities is added the emergency unleashed by the earthquake of last August 10, whose reconstruction demands a first and substantial financing quota within the 2027 budget.
“The hidden liabilities maliciously left out by the previous administration, and the new spending demands posed by the reconstruction, lead to the observation of that 59.3 trillion pesos gap“, Restrepo detailed.
The other unfunded gaps
Beyond the public debt front, the Ministry of Finance identified a series of key items that were unfunded in the initial text that was returned two weeks ago by the Congress of the Republic.
These shortfalls were in personnel and payroll obligations (4.5 trillion pesos), pension spending (6.5 trillion pesos), the health system (2.0 trillion pesos) and the public universities (700 billion pesos).
Added to this is an imbalance of 9.6 trillion pesos in electricity and gas subsidies, along with outstanding commitments with the Fuel Price Stabilization Fund (FEPC).
The Ministry of Finance explained that the previous appropriation did not adequately incorporate salary adjustments above inflation nor the contributions inherent to the payroll.
A similar situation occurred in operating expenses. “An insufficient appropriation does not eliminate the need to provide public services; it simply generates budgetary pressure that results in modifications, execution restrictions, or accumulation of obligations“, the entity detailed.
This same problem repeated itself in pension spending and the health system, where the resource estimate ignored fundamental variables for updating the Capitation Payment Unit (UPC).
Likewise, the underfunding in energy and gas subsidies, added to the shortfalls in the FEPC, treated predictable social commitments as if they were contingent expenses, putting at risk the continuity of essential public services.
“As a poisoned legacy, the Petro administration had left a project that concealed enormous hidden liabilities that were simply swept under the rug. Now the De La Espriella government brings them out of the shadows,” Restrepo commented.
Financing without new taxes
That increase in expenses that the State will have to assume brings a fiscal challenge, as the National Government foresees a drop in tax revenue compared to this year, explained by the expiration of temporary taxes adopted during the economic emergency.
Consequently, the path to finance a budget that climbs due to debt would be to resort to new debt and thus not create more taxes, as was proposed in the Gustavo Petro administration’s proposal. According to the message accompanying the new project, increasing the tax burden would expose the country to an abrupt halt of economic activity.
In summary, if debt payment increases by 37.4 trillion pesos, the new debt that must be obtained grows by 113 trillion pesos. And it grows more because, in addition to payments of previous loans, other items were also underestimated.
The former Minister of Finance also proposed as an alternative a “gigantic rationalization of public spending”, dispensing with useless expenses and facing a monumental task that the Ministry of Finance has called the “Rescue Law“ of the economy.
Although its content is not yet known — it will be presented soon for Congress consideration — Restrepo assured that it is not difficult to anticipate that the country will face an “admirable fiscal revolution“ if such a gap is balanced without resorting to more taxes or indebting the Nation further.
“It will require sacrifices and political hardships, but it is essential to follow that rocky path if we want to return to a scenario in which Colombia is once again fiscally viable,” he added.
As a sign of this austerity path, the Minister of Finance, Miguel Gómez, announced a proposal to cut public spending by 21.9 trillion pesos in 2026. According to him, the measure is part of the National Government’s efforts to “make fiscal accounts transparent” and reduce the spending planned for next year.
For Andi, the challenge does not end in 2027. Mac Master points out that the country must now chart a multi-year path that allows knowing where the deficit, debt, spending, income, and investment are headed in the coming years.
“That recovery cannot rest solely on cuts. It will be necessary to prioritize and make spending more efficient, but also develop an intelligent financing strategy with better terms and conditions and, especially, a more ambitious relationship with multilateral organizations and international development institutions,” he said.
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