BOGOTA (Reuters) -Colombia’s government is weighing a tax reform proposal that, if passed, would help raise 26 trillion pesos ($6.48 billion) to fund its 2026 budget, two government sources told Reuters on Wednesday.
Most of the funds would be raised through tax increases, the sources said.
The proposed amount is higher than the 19 trillion pesos announced in June by Finance Minister German Avila during the presentation of the government’s medium-term fiscal framework.
A drop in tax income has caused Colombia’s public finances to weaken, prompting the government of Latin America’s fourth-largest economy to suspend the country’s fiscal rule.
The Finance Ministry has raised this year’s fiscal deficit target to 7.1% of GDP, compared to the earlier target of 5.1%. For 2026, the deficit is projected at 6.2% of GDP.
According to preliminary figures presented by Avila on Tuesday night at a cabinet meeting, the government will propose a 2026 spending budget of 551.66 trillion pesos to Congress, which is 7.9% higher than the 2025 budget of 511 trillion pesos.
Fiscal challenges led ratings agencies S&P and Moody’s to downgrade Colombia’s sovereign debt by one notch in June, citing the country’s weaker fiscal performance.
($1 = 4,015.04 Colombian pesos)
(Reporting by Carlos Vargas; Editing by Kylie Madry)
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