Colombia's Bold Tax Reform: Financing the Future Amid Fiscal Challenges
The Colombian government proposes a tax reform bill to raise 26.3 trillion pesos to support 2026 spending amidst a fiscal crunch. Facing limited legislative support and upcoming elections, President Gustavo Petro warns of increasing debt if not approved. Suspended fiscal rules result in increased deficit targets.
The Colombian government introduced an ambitious tax reform bill in Congress on Monday, aiming to raise 26.3 trillion pesos ($6.54 billion) to back its 2026 fiscal plans, announced Finance Minister German Avila.
With looming elections, the government battles a severe fiscal challenge. Minister Avila emphasized the reform's necessity not only for next year's budget but also to ensure fiscal stability by 2027.
However, President Gustavo Petro's administration, with limited congressional support, faces uncertainty. Failure to pass the reform may result in increased borrowing. The bill's proposed amount surpasses the earlier announced 19 trillion pesos ($4.73 billion), amid fiscal rule suspensions and rising deficit targets. Credit rating agencies have already downgraded Colombia's debt.
(With inputs from agencies.)
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