Colombia in IMF Financing Talks as Fiscal Pressure Builds

Colombia has held discussions with the International Monetary Fund in recent weeks, including on possible financing, as the government works to contain a deepening fiscal crisis that has unsettled investors, according to three people with knowledge of the matter.

One focus of the previously unreported talks was whether Colombia could obtain funding on more favorable terms as it faces rising borrowing needs and widening deficits, the sources said, speaking on condition of anonymity because the discussions are private.

President Abelardo De La Espriella, who took office in August, said on Sunday that he had directed his economic team to open talks with the IMF to seek a negotiated solution to the crisis. He acknowledged the severity of the strain on state finances but did not say the discussions had already begun.

After the talks were reported, Colombia's Finance Ministry confirmed it had asked the IMF to send a technical mission to the country, following meetings in Bogota between IMF Deputy Managing Director Nigel Clarke and Colombian officials. The ministry said the consultation would allow the fund to review the government's fiscal plan and economic outlook and would be a first step toward deeper cooperation.

The IMF later confirmed Clarke's visit and said it supported a "homegrown reform program" for Colombia, adding that a Finance Ministry delegation would travel to Washington next week for further talks. The fund did not announce any financing arrangement.

A separate source familiar with the matter said it remained too early to discuss the size of any possible program and that any formal negotiation would require a dedicated IMF staff mission and further talks with the authorities.

Colombia is grappling with lower tax revenue, expanded spending under the previous leftist government and persistent inflation. Those fiscal concerns have complicated efforts to contain borrowing costs and stabilize public debt, and De La Espriella has promised sweeping austerity measures to cut spending.

The government now expects the budget shortfall to be much larger than previously forecast this year and to widen further in 2027. It will also increase borrowing by more than $10.5 billion this year. In 2027, borrowing is set to reach $71.7 billion, more than double what was initially planned.