Colombia registered the largest fiscal deterioration in Latin America in 2025 with a primary deficit at 3.6% of GDP, according to the CEPAL “Panorama Fiscal de América Latina y el Caribe 2026” report published this week.
The Andean nation moved 1.2 percentage points in the wrong direction while regional peers improved their primary balances, with Panama (+2.5%), Nicaragua (+1.5%), and Mexico (+1.3%) leading regional fiscal strengthening.
The data lands as Colombia carries the highest 10-year sovereign yields in the region (12.4%), with TES bond rates above 13%, and just months before the 2026 presidential elections that will define the next four-year fiscal trajectory.
Key Points
— CEPAL Fiscal Panorama 2026: Colombia primary deficit -1.2 pp YoY (worst in LatAm).
— Primary balance: -3.6% of GDP; full fiscal deficit: 6.4% of GDP in 2025.
— TES yields above 13%, the highest in the region; 10-year at 12.4%.
— Public debt: 62.2% of GDP, up 6 percentage points YoY (largest jump in LatAm).
— Fitch: Colombia GDP growth of 2.7% in 2025 and 2.9% projected in 2026.
The CEPAL Read
The Rio Times, the Latin American financial news outlet, reports that the CEPAL Panorama Fiscal 2026 splits regional countries into three blocks: those strengthening fiscal positions (Panama +2.5%, Nicaragua +1.5%, Mexico +1.3%), those mildly deteriorating (Guatemala -1.0%, Uruguay -0.5%, Ecuador -0.4%, Dominican Republic flat), and Colombia at the worst end with -1.2 pp YoY change. Colombia’s full fiscal deficit reached 6.4% of GDP in 2025, second only to Brazil in absolute terms within the region. Diego Montañez-Herrera, senior economic researcher and Master in Economics from EAFIT, said Colombia is “moving in the wrong direction fiscally” while most of Latin America improves its primary balance.
Public-debt composition has also shifted, with TES (treasury bonds) now representing 61.5% of total Colombian debt and internal debt above 70%, according to March 2026 Hacienda data. Yields on Colombian sovereign paper have risen sharply across all maturities since 2022, with 1-year yields up 22%, 5-year yields up 19%, and 10-year yields up 6%, signaling market doubts about fiscal trajectory. The Economist recently ranked Colombia as having the second-highest fiscal deficit globally at -7.5% of GDP and the fourth-most expensive 10-year debt at 12.4%.
Why It Is Happening
Analyst Sergio Espitia attributes the fiscal stress to a combination of strong spending demands, demographic pressure, and constitutional rigidities that limit Hacienda’s adjustment options, with Espitia explaining that “incentives are different” because population demands grow faster than the economy’s financing capacity and many resources are constitutionally locked. The Comité Autónomo de la Regla Fiscal estimates that pending measures could widen the deficit by COP$5.3 trillion (US$1.4 billion) in 2026 and COP$8 trillion (US$2.1 billion) from 2027. The combination raises sustainability questions even as Colombia returns to the regla fiscal adjustment path required by law.
Comparative Block
ANIF analysis underlines the regional divergence: Colombia’s 7.1% deficit projection for 2025 dwarfs Chile (1.8%), Peru (2.2%), and Mexico (3.9%), with public debt projected at 62.2% of GDP versus structurally lower levels in those peers. Inflation also remains elevated at 5.1% versus a Chile-Peru-Mexico average of 3.4%, and unemployment at 8.9% is the third highest among the 40 countries analyzed by The Economist. Fitch sees Colombia growing 2.7% in 2025 and 2.9% in 2026, while government finances continue under pressure from interest payments above 13% on TES.
Espitia warned that fiscal deterioration translates directly into long-term costs: “deficit is more debt today that has to be paid tomorrow, less capacity to invest, and money taken away from people to finance political priorities”. Higher rates derived from the higher risk premium increase debt-service costs, displace private investment, and reduce countercyclical policy space. The Petro government has highlighted the recent debt cancellation with the IMF as a fiscal-management win, but Colombia continues to pay 14% on new TES, a level analysts describe as historically high.
| Country | Primary Balance Change YoY (2025) |
|---|---|
| Panama | +2.5 pp (improving) |
| Nicaragua | +1.5 pp |
| Mexico | +1.3 pp |
| Ecuador | -0.4 pp |
| Uruguay | -0.5 pp |
| Guatemala | -1.0 pp |
| Colombia | -1.2 pp (worst in LatAm) |
Connected Coverage
For broader Latin American fiscal and macroeconomic context, see our coverage of the Dominican Republic FDI surge in Q1 2026 and the Caribbean investment momentum and our analysis of Argentina’s Fitch upgrade to B- and the Milei government’s reform-driven fiscal turnaround.
What Happens Next
- Q3 2026: Hacienda Marco Fiscal de Mediano Plazo update; market test of fiscal trajectory.
- 2026 elections: Presidential ballot defines next four-year fiscal direction.
- Watch: Fitch and Moody’s reviews of Colombian sovereign rating after CEPAL data release.
Frequently Asked Questions
What did the CEPAL report find?
The CEPAL Panorama Fiscal de América Latina y el Caribe 2026 report identifies Colombia as the country with the worst fiscal deterioration in the region in 2025, with primary balance moving 1.2 percentage points in the wrong direction. Colombia‘s primary deficit reached 3.6% of GDP and the full fiscal deficit hit 6.4% of GDP, second only to Brazil in absolute terms. Regional leaders Panama, Nicaragua, and Mexico moved in the opposite direction, with primary-balance improvements of 2.5, 1.5, and 1.3 percentage points respectively.
How expensive is Colombian debt?
Colombia carries the highest sovereign-debt yields in the region, with TES bonds trading above 13% and 10-year paper at 12.4%, ranking as the fourth-most expensive 10-year debt globally according to The Economist. Yields have risen 4.3 percentage points on the 10-year bond between January 2022 and January 2026, signaling deteriorating market confidence in fiscal trajectory. TES bonds now represent 61.5% of total Colombian public debt while internal debt exceeds 70% of the total.
What is the structural cause?
Analysts attribute the fiscal stress to strong spending demands, demographic pressure, and constitutional rigidities that limit Hacienda’s adjustment options, with population needs growing faster than the economy’s financing capacity. Sergio Espitia explained that “incentives are different” given that constitutional resources cannot easily be moved. The Comité Autónomo de la Regla Fiscal estimates pending measures could widen the deficit by COP$5.3 trillion (US$1.4 billion) in 2026 and COP$8 trillion (US$2.1 billion) from 2027.
How does Colombia compare to peers?
ANIF projections show Colombia’s 7.1% fiscal deficit dwarfing peers like Chile (1.8%), Peru (2.2%), and Mexico (3.9%), with public debt at 62.2% of GDP versus structurally lower levels in those countries. Inflation runs 5.1% in Colombia versus a Chile-Peru-Mexico average of 3.4%, while unemployment at 8.9% ranks third-highest among the 40 countries analyzed by The Economist. Fitch projects Colombian GDP growth at 2.7% for 2025 and 2.9% for 2026, with the Q3 2026 Marco Fiscal de Mediano Plazo expected to provide updated guidance.
Updated: 2026-05-07T17:30:00Z by Rio Times Editorial Desk