Colombia finance minister flags $60 billion gap, proposes deep cuts

Miguel Gómez Martínez, set to become Colombia’s finance minister on Aug. 7, warned that the government ran an average monthly deficit of 12 trillion pesos between January and April, a shortfall financed by new borrowing. Public debt has risen from about 900 trillion to roughly 1,300 trillion pesos, putting the debt‑to‑GDP ratio above 60 percent and forcing the state to pay around 51 trillion pesos in interest this year – roughly 19.5 % of total government spending.

Gómez outlined an austerity plan that would freeze public spending in 2026 and slash it further in 2027, targeting a 60 trillion‑peso reduction and potentially laying off more than 700,000 civil servants. The proposal also calls for lowering corporate income tax, revising VAT exemptions, and eliminating the wealth tax, while maintaining the current basket‑goods VAT rate. He noted that Colombia’s public‑sector size is already below OECD averages, but argued that tighter fiscal discipline is needed to restore confidence and reduce borrowing costs.