The International Monetary Fund (IMF) issued a stark warning Friday about Colombia’s public finances, saying the country’s debt continues to grow and that its current fiscal trajectory “is neither sustainable nor viable.”
The statement adds to pressure on the government to address the imbalance in public accounts amid rising indebtedness and moderate economic growth prospects.
Nigel Chalk, director of the IMF’s Western Hemisphere Department, delivered the assessment during the fund’s annual meetings in Bangkok, Thailand. He said Colombia’s primary deficit stands at 3.5% of gross domestic product (GDP), while public debt amounts to about 60% of GDP and continues to rise.
The IMF confirmed that it remains in talks with Colombian authorities to explore possible forms of support, including technical assistance, economic advice and potential financing.
IMF warns Colombia’s public debt continues to grow and is ‘not sustainable’
“Colombia’s primary deficit is very large. It stands at 3.5% of GDP. Debt is at 60% of GDP and continues to rise. This situation is neither sustainable nor viable,” Chalk said, emphasizing the need for a coordinated effort to stabilize the country’s public finances.
The primary deficit measures the difference between government revenue and spending before interest payments on debt are taken into account. A deficit of this magnitude means the government spends more than it collects in revenue even before covering the cost of its financial obligations.
As debt increases, the government must devote more resources to interest payments and refinancing its obligations. This can reduce the budgetary room available for public investment, infrastructure, social programs and other priorities, while also driving up borrowing costs if markets lose confidence in the country’s fiscal outlook.
Chalk stressed that Colombia needs to make a significant effort to reduce its debt. The IMF’s concerns extend beyond the current level of public liabilities to the direction in which the country’s public finances are heading.
IMF mission to visit Bogota in November
The International Monetary Fund (IMF) confirmed that talks with the Colombian government are underway and that a technical mission is scheduled to travel to Bogota in early November. The visit will provide an opportunity to analyze potential measures to address the country’s fiscal situation and explore the different forms of assistance the fund could offer.
“We are still evaluating the modalities of our support: economic policy advice, technical assistance or, potentially, IMF financing,” Chalk said.
So far, no final decision has been announced regarding potential financial assistance, its scope or the conditions it might entail. These issues will be part of the discussions between the international organization and Colombian authorities.
Chalk also acknowledged the government’s willingness to address the problem, stating that the IMF believes the authorities are committed to tackling the country’s fiscal challenges.
The talks come as Colombia seeks to stabilize its public finances without slowing economic activity. Any fiscal adjustment will require the government to strike a balance between the measures needed to reduce the deficit and their potential effects on growth, investment and household incomes.
Moderate growth complicates fiscal adjustment
The IMF’s latest economic projections do not point to a significant acceleration that would quickly ease pressure on public finances. The organization expects Colombia’s economy to grow by approximately 2.25% in 2026 and 2.3% in 2027, according to figures presented during the meetings in Bangkok.
Although these forecasts point to continued economic expansion, they also suggest moderate growth that, on its own, will not be enough to resolve the country’s fiscal problems. Stronger economic activity could boost tax revenues and help reduce the debt burden relative to the size of the economy.
Chalk argued that Colombia has the potential to perform considerably better than currently projected. “The country’s potential is much greater. It should be growing much faster,” he said.
Stronger, sustained growth would help bolster public revenues, support job creation and reduce the relative burden of debt. Achieving that goal, however, would also require improvements in productivity and investment, along with a credible strategy to manage public spending and increase government revenue.