After the Constitutional Court struck down the December 2025 emergency economic decree, the Colombian government will present a tax reform to raise $16 trillion. Finance Minister Germán Ávila and President Gustavo Petro confirmed the plan in response to the fiscal imbalance. The measure aims to avoid cuts to social spending and address inherited deficits.
The Constitutional Court declared Decree 1390 of 2025 unconstitutional, under which the government had declared an economic emergency last December to raise about $11 trillion. The 6-2 decision prompted immediate reactions from the executive branch.
President Gustavo Petro criticized the ruling, arguing it exposes Colombians to more expensive debt, with rates rising from 7% to 13%. "The Constitutional Court, by not approving the emergency and suspending it, made real what was a probable supervening fact: effectively, the debt became more expensive by trillions of pesos," Petro said. He assured a new financing law will be presented to Congress to cover $16 trillion in budget underfunding.
Finance Minister Germán Ávila confirmed in a BLU Radio interview that the government will reintroduce the initiatives in a $16 trillion tax reform proposal. "We will present a tax reform proposal (...) we believe it will be on the order of $16 trillion," he stated. Ávila attributed the deficit to the previous government, particularly the Fuel Prices Stabilization Fund (Fepc), which cost $79 trillion from the budget.
Both leaders ruled out cuts to social programs, opting to review infrastructure investments and transfers to wealthy sectors. Ávila noted the net debt to GDP ratio stands at 58.5%, and contextualized inflation as global due to factors like the war in the Middle East.
