Key Points
- Colombia’s economic-policy jitters eased in November, however uncertainty continues to be greater than double “regular” ranges.
- Lower inflation and clearer election races calmed nerves, simply as Congress killed a significant tax plan.
- For buyers and expats, the massive story is whether or not fiscal self-discipline wins out over formidable however dangerous coverage experiments.
The most up-to-date shock in Bogotá was Congress’s resolution to bury President Gustavo Petro’s newest tax reform, a package deal designed to lift about 16.3 trillion pesos and assist fund the 2026 price range.
For firms and markets, the instant aid is evident: yet one more spherical of shock tax hikes has been taken off the desk, no less than for now. For the federal government, it leaves a big gap within the price range and exposes how fragile its assist in Congress has turn into.
This political conflict lands simply as Colombia’s Economic Policy Uncertainty Index, the IPEC compiled by Fedesarrollo, lastly comes off excessive ranges.
In November, the index fell to 216 factors, down 55 factors from October’s spike at 271 and barely beneath the 219 registered in November 2024.
Yet it nonetheless stands greater than twice the long-term common of 100 seen between 2000 and 2019, and Colombia has now spent over seven years above that outdated “regular.”
The IPEC relies on how usually newspapers speak about taxes, reforms, inflation, strikes, authorized battles and comparable themes. In November, simply over half of the information that fed the index was about financial, social and geopolitical coverage.
Another fifth got here from real-economy tales on development and jobs, with financial-market subjects and miscellaneous points every near 12%. Security barely counted.
Colombia Eases from Panic however Faces Fiscal Tests
The image is a rustic frightened much less about avenue crime and extra in regards to the guidelines of the sport for enterprise, funding and public spending.
What pushed uncertainty down? First, the inflation story improved. A really low month-to-month studying nudged annual inflation to round 5.3%, easing stress on the central financial institution to maintain rates of interest painfully excessive.
When costs look extra predictable, media headlines turn into much less alarmist about financial coverage. Second, the electoral calendar is settling. Parties have outlined their congressional lists, and the sphere for the 2026 presidential race is narrowing.
Fewer unknown figures and fewer radical proposals imply much less noise about dramatic coverage swings. The message is combined however essential. Colombia is now not in full panic mode, but it’s removed from calm.
The defeat of the tax reform exhibits that there are limits to how far formidable coverage can go when it collides with fiscal actuality and a skeptical Congress.
The subsequent assessments — minimum-wage talks, central-bank selections, and a tighter price range — will present whether or not the nation strikes towards clearer, rules-based administration or slides again into improvisation.
