In the prelude to begin the discussions of the General Budget of the Nation by 2026, after the formal filing of the project by the Ministry of Finance, an old fiscal movement of the Petro government again put in the center of the economic debate, since, despite the failures of the past, it would become Try to tie the expense accounts to a Financing or Tax Reform Law.
According to national government sources, the total expenditure projected by the portfolio of Germán Ávila for the next year is $ 557 billion, amount that exceeds $ 551 billion in current prices and the $ 534 billion at constant prices that were announced during the Council of Ministers two weeks ago in the Casa de Nariño.
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Part of these resources will be tied to a Financing or Tax Reform Lawwith which the Executive hopes to raise about $ 19 billion pesos, according to the preliminary accounts that have been revealed. With this, again the movement that did not result in President Petro last year and that resulted in a cut of spending for validity for $ 12 billion will not be attempted.
Similarly, the alerts focus that despite the fact that the calls that have been made so far so that the expense and the country are cut between in a tax discipline path, the budget accounts of next year are higher than their ones and are mostly concentrated in the operating items.
This project as soon as its process begins in the Congress of the Republic.
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Thus, the next key moment of this debate will come next month, since the presentation of the tax reform (Financing Law) will be at the end of August, as announced by the Ministry of Finance.
Higher budget, but without major investment
Although the Government has insisted that the projected expense is aligned with the goals of the National Development Plan, the truth is that the composition of the budget shows a strong pressure of rigid expenses, especially those associated with the operation of the State. Based on the figures that are known at the close of this edition, only between 2022 and 2026, the national budget has grown by more than $ 110 royal billion, but almost 90% of that increase has been absorbed by operation.
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In the initial calculations of the Minhacienda there was talk that the resources destined To this item will go from $ 253.9 billion to $ 353.4 billion in that same period, which implies that the current expenditure of the state continues to grow at a much higher rate than the Gross Domestic Product (GDP).
In contrast, public investment, although projected at $ 81.9 billion by 2026, maintains a descending trend in real terms and falls as a proportion of the total budget, going from 19.8% in 2022 to 15.3% in 2026.
This project as soon as its process begins in the Congress of the Republic.
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The trend worries especially because as long as the expense expands, structural income does not grow at the same pace, which extends the fiscal deficit and reduces the margins of government maneuver. In fact, according to sources close to the ministry, the projected growth of maximum income by 2026 would not exceed 1%, well below the increase in total expenditure, estimated at about $ 24 billion compared to 2025.
Risks of repeating an error
Beyond these accounts, the new attempt to condition the financing of the budget to the approval of a tax reform, which once failed in this administration, attracts a lot of attention, since political conditions have not improved. We must not forget that in 2024, the Congress sank a proposal of financing law for $ 9.8 billion and denied the expansion of indebtedness quotas, which forced the Executive to make an emergency adjustment.
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Now, the panorama is repeated with new figures, but with the same weaknesses Structural as lack of legislative consensus, a fragmented congress, presidential elections in the horizon and a calendar that plays against the process of a deep tax reform.
The new reform, according to official sources, would include adjustments to VAT and personal income tax for higher income taxpayers, which could contribute to fiscal sustainability. However, the perspectives of their approval are uncertain, especially because of the political wear and tear that would imply taxing new sectors in a context of economic deceleration.
This project as soon as its process begins in the Congress of the Republic.
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It should be remembered that a few weeks ago Fitch Ratings warned in its most recent report that Colombia considers the net fiscal adjustment of a point of the GDP planned by 2026, since it depends almost completely of additional income derived from a tax reform whose political viability is in doubt.
In its analysis, it maintains that the government’s fiscal plan contemplates reducing the central government deficit by 4 points of GDP by 2030, combining spending cuts (2.5 points) and income increases (1.5 points); But it makes it clear that until now concrete consolidation measures have been detailed, and the political and electoral context seriously limits the margin of action.
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In addition, it emphasizes that public debt will continue to grow in the coming years, going from 57% of GDP in 2024 to 63% in 2026, moving more and more from the average of countries with ‘BB’ rating (54%).
The pressure of rigid expenses
From the Government it has been defended that much of the growth of the budget is due to immodifiable legal obligations, such as pensions, the general system of participations, health and transfers to the teaching. In fact, only the pension item will exceed $ 84 billion in 2026, while health and promotion will concentrate another $ 50 billion.
This project as soon as its process begins in the Congress of the Republic.
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Although the Ministry of Finance highlights the effort to reduce debt service (which will go from $ 112.6 billion to $ 99.3 billion), savings derived from the end of payments to IMF is not enough to compensate for the growth of other budgetary commitments. Thus, the weight of rigid spending follows expanding and leaves less and less space for productive investment and regional projects.
In this way, the great unknown is whether Congress will approve a new financing law or if, as in 2024, the country will have to resort to emergency cuts and additional debt. For now, the 2026 budget continues its legislative course with a significant part of its sources pending definition.
Daniel Hernández Naranjo
Portfolio journalist
