COLOMBIA · FISCAL POLICY
Key Facts
- Warning: Goldman Sachs expects Congress to approve a diluted version of the government’s Economic Rescue Law.
- Deficit: Goldman sees a 2027 primary deficit of 2.5% of output; the government targets 2.1%.
- Government plan: The finance ministry says state savings reach 44.6 trillion pesos (about US$13.8 billion) in 2027.
- Gap in the bill: The bill covers about 75% of the plan; decrees and a 2027 development plan must supply the rest.
- Rate used: 3,221.19 pesos per US$1, the official rate for Thursday 5 November 2026.
- Power Index Colombia ranks 6th of 14 in The Rio Times Latin America Power Index, with 51.1 points (November 2026 edition).
The Colombia fiscal plan may be watered down by Congress, Goldman Sachs warned in a report this week. The US bank expects lawmakers to pass a weaker package than the one President Abelardo de la Espriella’s government filed on Thursday 29 October 2026.
Colombia sells bonds in pesos and in dollars, so its budget gap matters to American investors. Peso figures here use the official rate of 3,221.19 pesos per US$1 on Thursday 5 November 2026.
What Goldman Sachs Expects
Goldman Sachs says its main forecast is that Congress approves a diluted version of the package. It also sees a chance that the debate runs into 2027, which would delay the savings.
The bank puts Colombia’s primary deficit, the budget gap before interest payments, at 2.5% of economic output in 2027 and 1.2% in 2028. The government’s own targets are 2.1% in 2027 and 0.3% in 2028.
Goldman notes that the bill in Congress covers about 75% of the planned adjustment. The other 25% depends on presidential decrees and a National Development Plan expected in early 2027.
What the Colombia Fiscal Plan Contains
The government filed the Economic Rescue Law in Congress on Thursday 29 October 2026, according to the Finance Ministry. Finance Minister Miguel Gómez Martínez says it would cut state spending by 45 trillion pesos (about US$14.0 billion).
The ministry puts state savings at 44.6 trillion pesos (about US$13.8 billion) in 2027 and 76.1 trillion pesos (about US$23.6 billion) in 2030. It also says the law would refund sales tax, known as IVA, to 19 million Colombians.
On Wednesday 4 November the ministry said payroll spending would fall 20% in 2028, a saving of 9.6 trillion pesos (about US$3.0 billion) that year. It added that contracts for outside service staff, known as OPS, would be cut 50% in 2027 against 2026.
Vice President José Manuel Restrepo says doing nothing would push Colombia into default in 2027. Goldman, for its part, sees risks of missing the targets because the plan is so large.
Where Congress Could Cut
Goldman describes the tax side as one 19% sales-tax rate on most goods and services that are now excluded, with refunds for poorer households. It says that change would raise about 1.1% of output a year from 2028.
A lower income-tax filing threshold would add about 0.6% of output a year. A cut in the corporate tax rate from 35% to 31% in 2028 would cost about 0.4% of output a year from 2028 to 2030.
Goldman also warns that part of the savings comes from moving tax money around and changing labour exemptions. Real cuts may therefore be smaller than the totals suggest, and the transfer system is left untouched.
In Plain English, Who Is Who
Goldman Sachs is a US investment bank whose analysts advise investors in Colombian bonds and the peso. Its forecasts are opinions, not official numbers.
Abelardo de la Espriella became president of Colombia in August 2026, and Miguel Gómez Martínez is his finance minister. José Manuel Restrepo is the vice president, and the bill began in the Chamber of Representatives.
What It Means for You
Investors who hold Colombian peso or dollar bonds should watch whether Congress keeps the spending cuts and the sales-tax changes. In Goldman’s view, a weaker law leaves the 2027 deficit above the government’s target.
US companies that operate in Colombia would see the corporate tax rate fall to 31% in 2028 if the bill passes unchanged. Our reports on President De la Espriella’s first crackdown and its market test and on his corporate tax cut plan give the background.
What Is Not Known
Which measures Congress keeps is not yet known, because the Chamber of Representatives and the Senate must still vote. The Finance Ministry can say what it would give up to win those votes.
The content of the last 25% of the plan is not public. Finance Minister Gómez and the planning authorities are expected to detail it in the National Development Plan in early 2027.
More: Latin America news in English, every day from The Rio Times.
Frequently Asked Questions
What is Colombia’s Economic Rescue Law?
It is the government’s bill to cut the budget deficit through lower state spending and tax changes. The Finance Ministry says it was filed in Congress on 29 October 2026.
What does Goldman Sachs expect Congress to do?
Goldman expects Congress to pass a diluted version of the package. It also sees a chance that the debate runs into 2027.
How big is the planned spending cut?
The finance minister says state spending would fall by 45 trillion pesos (about US$14.0 billion). The ministry puts the savings at 44.6 trillion pesos (about US$13.8 billion) in 2027.
Why does it matter to US investors?
Colombia issues bonds in pesos and dollars, and a larger deficit raises the risk of higher borrowing costs. Goldman sees the 2027 gap at 2.5% of output against a 2.1% target.
Sources: Colombian Finance Ministry, Economic Rescue Law announcement, Thursday 29 October 2026; Colombian Finance Ministry, statement on payroll and service-contract savings, Wednesday 4 November 2026; Goldman Sachs report on Colombia’s Economic Rescue Law, 4 November 2026; Superintendencia Financiera de Colombia, official exchange rate (TRM) of 3,221.19 pesos per US$1, Thursday 5 November 2026.
This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error · Editorial responsibility: Matthias Camenzind, Editor-in-Chief
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