Fitch warns Colombia needs major measures to stabilize debt

Fitch Ratings has warned that Colombia requires significant measures to stabilize its national debt amid a challenging fiscal landscape. The agency noted that persistent high deficits and a steep debt-to-GDP trajectory could increase pressure on the country's credit rating.

The 2027 budget, presented by the administration of Abelardo de la Espriella, projects a wider fiscal deficit than previously signaled. This budget accounts for increased spending in areas such as pensions, healthcare, education, and energy subsidies. Additionally, interest costs have been revised upward following bond repurchases that, while reducing nominal debt stock, fixed higher rates.

Fitch estimates that a fiscal adjustment of 4 percentage points of GDP would be necessary to stabilize the debt-to-GDP ratio. To alleviate pressure on the expensive domestic market, the budget assumes $27 billion in gross external loans and $23 billion in net terms, which is more than double the 2026 levels. Fitch cautioned that achieving these borrowing levels in bond markets may be difficult and might require substantial support from international financial institutions.