The Congress of the Republic enters this week in the final stretch of one of the most important economic debates of the year due to the approval of the General Budget of the Nation (PGN) for 2026, which since October 14, will face the usual countdown, in which they race against the ghost of the decree.
That is why the plenary sessions of the Senate and Chamber will resume the discussions that will define not only the total amount of spending, but the type of country that the Government intends to finance in the midst of a narrow fiscal panorama, a high deficit and a tense political climate. All this, with a view to not going beyond October 20.
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The law is clear and establishes that the budget must be approved before that date or, otherwise, the Executive will be empowered to issue it by decree, a measure that, although legal, was already implemented in 2024 and was interpreted by the markets as a failure of consensus and a blow to the institutions.
In this prelude, the first thing to say is that the atmosphere has already been charged since the first debate in the Joint Economic Commissions, where the official proposal for $557 billion was defeated and replaced by an alternative of $546.9 billion, promoted by representative Olga Lucía Velásquez.
The 2026 expense accounts generate high expectations among analysts.
Image from ChatGPT
Although the numerical difference seems modest, the change had a strong political significance, since it marks a point of agreement between Congress, which is not willing to approve an expansive budget without clear financial support, and the Government, which has already made it clear that if there is no support for its ideas, it will not hesitate to go down the administrative route.
A week of definitions
It is also worth mentioning that the Budget is just one of the various fiscal fronts that the country must address at the end of the year. Not in vain, Scotiabank Colpatria warned that October will be a month of crucial definitions for the Colombian economy, since in parallel are the growth projections and the management of monetary policy by the Bank of the Republic.
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This is why in the midst of high expectations, the outcome of the budget will be a determining factor for the confidence of the markets and the direction of the dollar; Therefore, “the country’s attention will be focused on Congress,” as Scotiabank Colpatria warns; which in turn explains that expectations regarding spending, deficit and fiscal policy will depend on the result at a time of high external volatility.
On the other hand, the diagnosis is not minor, since the 2026 budget arrives with an imbalance evident between income and expenses. As Senator Angélica Lozano recalled, the Government presented an unbalanced project, with a difference of $26 billion pesos that would be covered with a financing law not yet approved.
The 2026 expense accounts generate high expectations among analysts.
Image from ChatGPT
“In theory, reducing the amount to $546 billion brought the figures closer to a break-even point, but only on paper. It is an accounting trap, because these revenues assume that the tax will contribute $16 billion, something that I do not see possible in the current political environment,” he highlighted.
Lozano has been one of the most active voices in proposing a “fiscal lock”, a clause within the presentation of the second debate that prevents the Government from going into more debt if the financing law is not passed. approves; arguing that “we cannot allow the fiscal gap to be covered with more external credit”.
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Basically, his proposal seeks to guarantee that, in the absence of new tax revenue, the Executive does not resort to international loans or complex debt operations that compromise future sustainability. All this, under the current context in which the Government has resorted to unprecedented mechanisms such as the debt operation in Swiss francs (TRS), with which more costly internal obligations were replaced by short-term external loans.
“Although this move allowed for an apparent saving of $10 billion, primary spending, which includes investment and operation, increased by $18 billion. It is an exchange of debt for debt. Fresh money today, more commitments tomorrow,” summarized Lozano, who warns that this strategy leaves the country more exposed to changes in the exchange rate and international rates.
The 2026 expense accounts generate high expectations among analysts.
Image from ChatGPT
Carf’s warnings
The concerns of Congress coincide with the technical observations of the Autonomous Committee of the Fiscal Rule (CARF), which in its last report was categorical in stating that the General Budget of the Nation 2026 is not consistent with the Medium Term Fiscal Framework (MFMP) approved in June.
For these experts, the initial financial plan projected a total deficit of 6.2% of GDP and a primary deficit of 1.4%, under the premise of austere spending and without real growth beyond inflation. However, the project sent to Congress increased spending by 0.9 points of GDP, which brought the deficit primary at 2% and net public debt at 63% of GDP, the highest level in recent history.
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For the Committee, the gap between official projections and the presented budget reveals structural fiscal planning problems. Furthermore, it warns that the financing of additional spending is based on transitory and highly uncertain sources; Therefore, even if the $26.3 billion tax reform were approved, the budget would still be underfunded by nearly $19 billion, which requires a fiscal adjustment of $45 billion (2.4% of GDP) to meet the Government’s goals.
Here it must also be said that this authority drew attention to the rigidity of public spendingwhich reaches 88% of the total, which leaves little room for maneuver in investment or social programs; given that two thirds of this rigidity comes from legal or constitutional obligations, such as transfers, pensions or protected social spending.
The 2026 expense accounts generate high expectations among analysts.
Image from ChatGPT
The opposition moves its chips
Meanwhile, the opposition parties Cambio Radical and Centro Democrático decided to postpone the Parliamentary Summit of the Opposition scheduled for October 15, with the purpose of allowing their congressmen to fully participate in the budget vote. In a joint statement, both groups affirmed that the project has “serious errors and inconsistencies” and denounced “political management of spending” in a pre-electoral year.
“It is essential to exercise political control and defend public resources,” they noted; At the same time, they indicated that their strategy aims to distance themselves from the Government without blocking the approval of the budget, although with the clear intention of conditioning each sensitive article. In practice, this means that the Executive will need partial supports and specific transactions to achieve approval before October 20.
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What is emerging, then, is a high-voltage debate where technical, political and financial interests converge; in which, on the one hand, a Government that seeks to maintain its social programs and public investment amid increasing restrictions; on the other, a Congress that wants to show fiscal prudence without bearing the political cost of a budget by decree.
DANIEL HERNÁNDEZ NARANJO
Portfolio Journalist
