According to Banco de Bogotá's 'La Lupa Fiscal', Colombia's National Government would meet the 7.1% of GDP fiscal deficit target in 2025, thanks to debt management operations and lower interest payments. However, Fedesarrollo estimates point to 7.5%, the second highest in recent decades. This situation is influenced by factors like inflation and expansive public spending.
Banco de Bogotá's 'La Lupa Fiscal' report states that Colombia would close 2025 with a fiscal deficit of around 7.1% of GDP, meeting the target set in the Medium-Term Fiscal Framework (Mfmp). This contrasts with earlier alerts from Investigaciones Económicas, which since May estimated -7.8%, but factors like debt management operations (OMD) from the Dirección de Crédito Público y Tesorería Nacional (Dcptn) have been key. Among them, high volume of OMD, sovereign reference swaps (TRS), TES purchases by Dcptn, low exchange rates influenced by monetizations exceeding US$5 billion from September to November, and a nominal GDP higher than expected due to greater inflation, with growth above 8% versus the projected 6.4%.
At the Asofuciarias Congress on October 16, J. Cuéllar, Dcptn director, revealed that interest payments would be between 3.2% and 3.8% of GDP, below the Mfmp's 4.7%. This is explained by an observed average TRM of $3,962 in the second semester, versus $4,335 projected, reducing external debt interest by 0.2% of GDP. Additionally, Dcptn operations, in a global risk appetite context, would save 0.5% or more of GDP in interest, with TES holdings at $14 trillion and deferral of over $4 trillion in payments to 2026.
However, Fedesarrollo estimates a 7.5% of GDP deficit, the second highest recent, driven by expansive public spending that pressures aggregate demand and inflation, which reached 5.51% annual in October, marking four months of increase. Luis Fernando Mejía, Fedesarrollo director, stated: “The inflation figures have not been good in the last four months. This uptick is one of the factors that has prevented the Banco de la República from reducing its interest rate.” The rate remains at 9.25%, with inflation projected above 5% by year-end. This interest payment reduction would allow higher primary spending, but the deficit limits fiscal space amid lower growth and high debt.