Fitch warns Colombia's fiscal deficit could hit 7% of GDP in 2026

Fitch Ratings has projected that Colombia's fiscal deficit will reach close to 7% of gross domestic product (GDP) in 2026, according to Richard Francis, the agency's lead analyst for the country. Speaking at a Fitch event in Bogota on Tuesday, Francis noted that this estimate does not yet account for reconstruction spending following last week's powerful earthquake.

Francis indicated that quake-related expenditure could add roughly half a percentage point of GDP to the deficit this year, though he stressed that a firm estimate remains difficult at this early stage. The magnitude 7.4 earthquake damaged buildings, homes, schools, hospitals, and roads across a wide area, from the Pacific port of Buenaventura to cities including Quibdo, Cali, Pereira, and Manizales.

President Abelardo De La Espriella said on Monday that preliminary estimates place losses from the disaster at 30 trillion pesos ($9.59 billion).

"Fiscal issues are Colombia's Achilles' heel. The fiscal deficit remains quite high. We estimate it will reach almost 7% of GDP," Francis said.

Even before the earthquake, Colombia required a fiscal adjustment equivalent to about 3% of GDP, Francis added, suggesting such an effort could span the full term of the incoming government. The outgoing administration had raised its 2026 deficit target to 5.3% of GDP in June, but new Finance Minister Miguel Gomez has said the deficit is currently running between 7% and 8% of GDP.

Fitch expects Latin America's fourth-largest economy to grow 2.7% this year, with growth slowing to near 2% in 2027. Francis said Colombia's public debt would reach 65% of GDP this year, a level he described as high but manageable.