Colombia's Revised Fiscal Plan Draws Mixed Reception on Wall Street

Colombian economic officials wrapped up a week of meetings with Wall Street investors with a divided reception, after laying out budget plans for 2026 and 2027 that sharply raise deficit targets and rely on heavier borrowing at home and abroad.

The delegation was led by Vice President Jose Manuel Restrepo, with representatives from the finance and commerce ministries. Officials outlined plans that include increased borrowing in international and domestic markets alongside wider fiscal gaps.

The government has raised its deficit target for this year to 7.2% of GDP from 5.3%, and lifted its 2027 target to 9.4% from 4.5%. Government borrowing is projected to rise by more than $10.50 billion to about $34 billion this year, and to climb to $71.66 billion in 2027, up from an earlier estimate of $32.98 billion.

Bank of America said it saw a firm political commitment to fiscal adjustment and a sensible implementation plan after meeting the officials, and upgraded Colombia's external debt to "overweight" from "marketweight."

Other investors, however, were less convinced. Those who took part in the meetings praised the new administration's transparency on its figures and fiscal goals, but flagged concerns about market conditions.

"I like the strategy, (...) but there are concerns; we're in a situation where the foreign bond market is very complex, very sensitive, and it's difficult to guarantee relatively decent rates," a senior executive at an investment bank who attended the meetings said.

In a private note to clients, another investment bank said "what we heard did not meaningfully alleviate our concerns," warning that the plan would pressure yields and frustrate recovery. "We think the more realistic scenario is one where the adjustment that ultimately goes through is, at best, closer to 1.1% of GDP," the note said.

Investors are still waiting for details of a spending cut bill needed to reduce next year's deficit by about 2 percentage points.