Although after the cuts that were approved in Congress, the General Budget of the Nation (PGN) 2026 seems more realistic in numbers, for analysts this does not concretely translate into sustainability; As warned by the Fiscal Observatory of the Pontificia Universidad Javeriana, which in its most recent report concludes that it maintains a high degree of rigidity, an over-reliance on uncertain revenues and a prolonged suspension of fiscal discipline.
The study, prepared by the Observatory’s technical team, highlights that the country will reach 2026 with a historical deficit of 7.1% of GDP and a public debt that exceeds 60%, after the activation of the escape clause of the Fiscal Rule; a measure, in force for three years, that allows the Government to expand its spending margin amid the economic slowdown and social pressures, but at the same time delays the return to budget balance until 2028.
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The approved budget amounts to $547 billion, a figure lower by $10 billion than the original project presented by the Ministry of Finance. However, the adjustment does not modify the composition of spending, since 66% corresponds to operation, 18% to debt service and only 16% to public investment.
This means that 84% of total spending is committed to permanent obligations, which leaves minimal margin to finance new projects or reactivate the economy; Therefore, the document summarizes that “the cuts do not alter the core of the problem: we continue to spend a lot on maintaining the structure of the State and very little on transforming it.”
Despite the cuts approved in Congress, next year’s Budget remains underfunded.
Image from ChatGPT
“The sectors most affected by the reductions were Treasury, Labor and Social Inclusion, while health, transportation and the Presidency of the Republic received slight increases. These decisions reflect a political rather than a technical distribution, which responds to current pressures and not to criteria of fiscal efficiency or social impact,” they highlighted in the report.
The report also warns about the inclusion of $16.3 billion conditional on the approval of a new financing law, on which a good part of the sustainability of public accounts depends. According to the Ministry’s projections, this law would allow raising an additional $26.3 billion, equivalent to 1.4% of GDP, through adjustments in taxes on alcohol, tobacco, fuel and VAT. However, the exclusion of territorial taxes, such as beer and liquor, because it is considered unconstitutional, has reduced collection expectations and increased uncertainty.
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In broader terms, the Observatory warns of a structural gap between the Financial Plan and the PGN, where primary spending exceeds that projected by the Medium-Term Fiscal Framework by 0.6 points of GDP, while income is reduced by 0.2 points. This imbalance not only compromises the coherence of fiscal policy, but also undermines the credibility of the adjustment goals set by the Government.
Tax collection, for its part, remains stagnant, since after reaching a peak of 16.6% of GDP in 2023, thanks to the payment advances derived from the 2022 reform, the effective income of the Central National Government fell again below 15%.
Despite the cuts approved in Congress, next year’s Budget remains underfunded.
Image from ChatGPT
“Projections point to a gradual recovery to 16.5% in 2026, but this goal is optimistic and difficult to meet without additional structural reform. The recurring use of one-time transactions to temporarily inflate collections, for example, advance collections or asset sales, has also distorted the transparency of fiscal figures,” they noted.
Given this, the Observatory emphasizes that the problem does not lie solely in the amount of the budget, but in the quality of spending, given that in 2025, budget execution reached 58.7% as of September, a figure in line with the historical average, but with an accumulated lag of $62.6 billion from the previous year and although the pace of disbursements has improved, the impact on the deficit remains high and restricts the possibility of new adjustments in 2026.
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“Added to this is the unequal territorial distribution of investment, of which only 74% is regionalized. Bogotá, Antioquia, Valle, Cundinamarca and Atlántico concentrate almost half of the resources, while peripheral departments such as Vaupés, Guainía and Amazonas receive less than 1%. This gap reflects a persistent inequity in the allocation of public spending that contrasts with the discourse of territorial equity,” said the Observatory.
In this way, the final balance of the report is blunt and maintains that the PGN 2026 corrects some excesses of the past, but does not change the trajectory of fiscal deterioration; since the adjustments are more cosmetic than structural and depend on still uncertain political and judicial decisions.
DANIEL HERNÁNDEZ NARANJO
Portfolio Journalist
