Fitch Ratings downgraded Colombia’s credit outlook to negative due to fiscal concerns, affirming its BB rating. The central government’s fiscal deficit stood at 6.8% of GDP last year, surpassing expectations. Finance Minister Guevara stated a projected reduction to 5.1% this year, yet worries persist about debt levels and the government’s fiscal management under President Gustavo Petro.
Fitch Ratings has downgraded Colombia’s rating outlook from stable to negative, primarily due to concerns regarding the nation’s deteriorating fiscal balance and skepticism about the implementation of necessary corrective measures in the near future. The credit rating remains affirmed at BB. In the previous year, Colombia reported a central government fiscal deficit of 6.8% of its gross domestic product (GDP), surpassing Fitch’s projected gap of 5.6%. According to Fitch, the country’s fiscal situation presents significant risks as the government will likely continue to face challenges in achieving fiscal targets, with the debt-to-GDP ratio expected to rise continuously.
Finance Minister Diego Guevara echoed investor concerns last month by stating that despite a growing budget deficit, Colombia remains compliant with its fiscal rule, projecting a reduction in the deficit to 5.1% of GDP for this year. However, worries linger regarding President Gustavo Petro’s capacity to address fiscal deficits amid sluggish economic growth and insufficient fiscal revenues. As of 2025, the government faces a budget shortfall of 12 trillion pesos, deemed too low by the fiscal rule oversight committee.
According to financial estimates from the ministry, the debt-to-GDP ratio experienced a 6.2 percentage point increase last year, reaching 60%, with projections indicating a slight rise to 60.6% in 2025. Fitch projects that meeting the revised fiscal rule target will prove challenging this year due to ambitious revenue-raising targets set by the tax administration agency. The agency now anticipates a central government budget deficit of 6.2% of GDP for 2025 and 5.8% for 2026, exceeding prior estimates of 5.1% and 4.7% for those respective years.
Fitch has expressed concerns regarding potential downside fiscal risks that could further affect its revised forecasts, particularly stemming from continued revenue shortages and the Petro administration’s hesitance to adjust spending priorities.
Fitch Ratings has shifted Colombia’s rating outlook from stable to negative due to serious fiscal concerns, including a higher-than-expected deficit and challenges in meeting fiscal targets. Despite official reassurances of compliance with fiscal rules, uncertainty remains about the government’s ability to address these issues effectively. The projected increase in the debt-to-GDP ratio further complicates Colombia’s fiscal future, with growing skepticism among investors regarding remedial actions under the current administration.
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