Colombian Government Declares Economic Emergency Amid Financial Challenges
BOGOTA, Colombia (AP) — The government of Colombia has announced an economic state of emergency, a move that grants President Gustavo Petro’s administration the authority to levy taxes by decree. This step comes as the country faces difficulties in managing its financial obligations, including funding for hospitals and military operations, while also contending with unprecedented debt levels.
President Petro enacted the decree on Monday night following the administration’s inability to secure congressional approval for a tax proposal aimed at increasing the government’s budget by $4 billion by 2026, a year marked by upcoming presidential and congressional elections.
Since taking office in 2022, Petro’s administration has seen a surge in public expenditure, surpassing even the spending levels during the pandemic. For 2025, Colombia’s national budget is estimated at approximately $134 billion.
The decree highlights the need for additional resources to sustain fuel subsidies, fulfill health insurance obligations, and invest approximately $700 million in military infrastructure to counteract drone threats from insurgent groups.
As of now, the government has not detailed the specific taxes it intends to implement under this emergency declaration. However, leaked documents covered by local media suggest plans to introduce new wealth taxes targeting businesses and individuals, alongside a significant sales tax on alcoholic beverages, including rum and wine.
Business groups have voiced strong opposition to the decree, labeling it as authoritarian and criticizing its bypassing of congressional oversight. Bruce Mac Master, head of Colombia’s National Association of Industrialists, expressed on social media that the decree represents a “flagrant abuse of the rule of law.”
Many experts anticipate that the Constitutional Court may annul the decree. According to Colombian legislation, an economic emergency can only be declared in the face of a severe, imminent, and unforeseen threat to the nation’s economic stability.
Jorge Restrepo, an economics professor at Bogota’s Javeriana University, remarked on the difficulties the government may face in persuading Colombia’s highest court that the decree satisfies legal criteria. “This was not an unexpected situation … like a war or natural disaster,” he commented regarding the current fiscal deficit. “We knew there was a fiscal crisis brewing since the middle of last year.”
