Una estrategia de ajuste fiscal

Abstract

Colombia is facing an unprecedented fiscal crisis that has reduced the room for maneuver of economic policy and put the sustainability of public finances at risk. Between 2020 and 2025, the fiscal deficit would average 6.4% of GDP, nearly twice the level recorded between 2000 and 2019. As a consequence, the central government’s net debt reached 59.3% of GDP in 2024 and, if no tax measures or spending adjustments are implemented, it is projected to exceed the fiscal rule ceiling, following an upward path that could take it to 81% of GDP by 2031.

This situation stems from a structural gap between revenues and expenditure that has deepened in recent years. On the revenue side, the tax system remains heavily reliant on corporate taxpayers, which undermines the economy’s competitiveness, while the personal income tax base is narrow and VAT efficiency lags behind that of comparable economies. On the other hand, primary spending has increased significantly after the pandemic: it rose from an average of 16% of GDP between 2015 and 2019 to 20.2% in 2020, and is projected to average 18.8% between 2021 and 2025, driven by spending pressures in health, the General System of Transfers (SGP), pensions and the Fuel Price Stabilization Fund (FEPC).

In this context, Fedesarrollo proposes a structural fiscal reform that combines revenue and expenditure measures to achieve an adjustment equivalent to 1.8% of GDP in the medium and long term, whose additional effects on economic growth and the credibility of fiscal policy would make it possible to reach a fiscal adjustment of approximately 3.0% of GDP. The core of the proposal is to strengthen the tax system by broadening the tax base and reducing distortions, as well as to contain structural spending pressures and improve spending efficiency, in order to restore fiscal sustainability and preserve macroeconomic stability.