Narayan AmmachchiColombia is projected to record the world’s third-largest fiscal deficit in 2026, with the budget shortfall expected to reach 6.6% of GDP, according to the Economist Intelligence Unit (EIU).
Only Brazil (-7.3% of GDP) and Poland (-7.0% of GDP) are forecast to post larger deficits among the 43 major economies covered by the report.
The projection exceeds Colombia’s official Medium-Term Fiscal Framework by 1.3 percentage points, highlighting growing pressure on the country’s public finances as President Gustavo Petro‘s administration nears the end of its term.
The widening fiscal gap is largely attributed to the failure of the government’s proposed tax reform, which was rejected by Congress, leaving expected revenue unrealized while expenditure commitments remained unchanged.
The report, widely analyzed by Colombian papers including La República, Infobae, and Colombia One, also points to Colombia’s rigid budget structure, where legally mandated spending on pensions, public sector wages, and transfers to local governments leaves limited scope for expenditure cuts.
Higher global interest rates have further increased debt servicing costs, forcing the government to devote a larger share of its budget to interest payments. The EIU also projects Colombia’s current account deficit at 2.5% of GDP in 2026, adding to external financing pressures.
Investor concerns are already reflected in financial markets, with yields on Colombia’s 10-year sovereign bonds hovering around 11.8%, raising borrowing costs for the government.
Because the fiscal imbalance is structural rather than cyclical, the administration taking office in 2026 will inherit limited fiscal flexibility. Without significant spending restraint or a successful tax reform, Colombia could face renewed pressure on its sovereign credit rating and reduced access to affordable financing.
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