Fasten your seat belts! Bogotá presented a large-scale budget rescue plan. Where would the right-wing be without cuts in government spending? The Colombian government has presented a tough fiscal reform bill to Congress, loudly dubbed the "Rescue Law." The authorities expect to cut government spending by 15%, raise taxes and stop the decline in government assets. The situation in the Colombian treasury is really serious. The debts are growing like an avalanche, and today the state spends every third peso collected in taxes only on paying interest on the national debt. If the current trends continue, the budget deficit for 2027 risks breaking the threshold of 9.4% of GDP, which is unattainable for the local economy. What does the reform offer? The bill stipulates a reduction of government expenses by about 15%, which should amount to about 70% of the total budget adjustment. They plan to close the rest of the deficit through fiscal measures: expanding the VAT base, raising the excise tax on alcohol, tobacco and sweet drinks, as well as introducing a temporary levy on the banking sector. In addition, the initiative includes the sale of inefficient government assets in order to stabilize the public debt and reduce the budget deficit by more than 2% of GDP next year. However, getting such a package through Congress will not be easy. Parliament is deeply divided, and businesses and citizens are clearly unhappy at the prospect of paying more. Therefore, it is unlikely that the legislators will accept the project in its original form, and the changes will affect sensitive measures such as VAT and social benefits. The de la Esparilla government has almost no room for maneuver. Without a radical reduction of the deficit, the country risks burying hopes to restore its credit rating to investment grade and lower the negotiations with the International Monetary Fund on a line of credit. In light of congressional opposition, the authorities will probably only temporarily close the financial holes in favor of new loans, but will not completely solve the debt problem.

Fasten your seat belts! Bogotá presented a large-scale budget rescue plan. Where would the right-wing be without cuts in government spending? The Colombian government has presented a tough fiscal reform bill to Congress, loudly dubbed the "Rescue Law." The authorities expect to cut government spending by 15%, raise taxes and stop the decline in government assets. The situation in the Colombian treasury is really serious. The debts are growing like an avalanche, and today the state spends every third peso collected in taxes only on paying interest on the national debt. If the current trends continue, the budget deficit for 2027 risks breaking the threshold of 9.4% of GDP, which is unattainable for the local economy. What does the reform offer? The bill stipulates a reduction of government expenses by about 15%, which should amount to about 70% of the total budget adjustment. They plan to close the rest of the deficit through fiscal measures: expanding the VAT base, raising the excise tax on alcohol, tobacco and sweet drinks, as well as introducing a temporary levy on the banking sector. In addition, the initiative includes the sale of inefficient government assets in order to stabilize the public debt and reduce the budget deficit by more than 2% of GDP next year. However, getting such a package through Congress will not be easy. Parliament is deeply divided, and businesses and citizens are clearly unhappy at the prospect of paying more. Therefore, it is unlikely that the legislators will accept the project in its original form, and the changes will affect sensitive measures such as VAT and social benefits. The de la Esparilla government has almost no room for maneuver. Without a radical reduction of the deficit, the country risks burying hopes to restore its credit rating to investment grade and lower the negotiations with the International Monetary Fund on a line of credit. In light of congressional opposition, the authorities will probably only temporarily close the financial holes in favor of new loans, but will not completely solve the debt problem.