More expensive food and services, some of the effects of the fiscal crisis on the pocketbook

Although the fiscal deficit seems like a distant and technical concept, its consequences are already knocking on the doors of millions of Colombian homes. While recent figures from the Ministry of Finance and the International Monetary Fund reveal that the country closed 2024 with a deficit of 6.8% of GDP, far exceeding the legal limit of 5.6%, people at home are feeling the pressure, often without knowing why.

The first thing to understand in this situation is that the State is spending much more than it receives, and this gap is beginning to be covered by more taxes, fewer subsidies, and more expensive services, undermining investor confidence and the capacity for growth that ultimately brings development to households.

More information: The OECD lowered Colombia's growth projection for 2025 from 2.7% to 2.5%.

In a conversation with Portafolio, tax and legal services partner Juan Carlos Arbeláez Mesa indicated that the fiscal crisis is already being felt in the pockets of Colombians, given that "when the State runs out of resources, the same thing happens to a family: it has to go out and find where to get the money to cover the essentials. And that search generally ends with the taxpayers."

A gradual adjustment

One of the first mechanisms used by the Government to increase revenue collection was the adjustment to the withholding tax rules, implemented through Decree 572 of 2025, which lowered the taxable base for this process.

This means that, for example, a person who provides independent services and invoices $100,000 will now see a deduction of 4% (i.e., $4,000), a figure that, while seemingly small, represents a direct blow to those who live day to day, according to the calculations of this team of analysts.

“Four thousand pesos less on a bill may not sound so serious, but for someone who's self-employed, that amount adds up with every service, every day, every week. And that starts to take a significant toll on the family budget,” Arbeláez warns.

One of the most visible effects of this situation is the rising cost of living. Although general inflation has eased slightly, the prices of food, utilities, and medicines remain high, and "Colombians are paying more for the same things today. Grocery bills are higher, and water and electricity bills are relentless," the expert comments.

This pressure is due in part to factors such as lower foreign investment, reduced public spending, and high interest rates that make credit more expensive and curb consumption. Added to this is economic distrust, which also impacts the performance of the dollar and other key prices for the domestic economy.

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Housing and health

The impact on the housing sector is another reflection of the fiscal constraints, as programs such as Mi Casa Ya, which in previous years allowed many families to access a rate subsidy to purchase a home, suffered substantial cuts. For example, at the end of 2024, the program was suspended due to lack of resources, affecting more than 40,000 households. Although it was reactivated in 2025, it returned with less coverage and more restrictions.

"The consequence is clear: people who previously received assistance to pay interest now have to bear those costs directly. And in an environment of high interest rates, this can mean an increase of up to 30% in monthly payments," Arbeláez points out.

According to industry figures, nearly 49,000 families could forgo home purchases this year due to a lack of government support. This impacts not only households but also the construction sector, which sees a decline in demand.

On the other hand, higher education has also felt the impact of budget cuts, and Crowe Co.'s accounts highlight that Icetex, the main source of funding for low-income students, reduced its loan openings by 40,000 compared to last year. Its budget fell 33%, from $1.2 trillion to $859 billion.

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Furthermore, interest rate subsidies that benefited the most vulnerable students were eliminated, making loans more expensive by an average of 17% and particularly impacting low-income families, who now have fewer opportunities for their children to enroll or remain in college.

"At public universities, on the other hand, the lack of available spaces is an additional barrier, as there isn't enough capacity to meet the growing demand for free higher education," said Juan Carlos Arbeláez.

Health is not saved

One of the most worrying aspects of the fiscal impact is in the health sector. While the system's problems are not solely rooted in the fiscal deficit, they have been exacerbated by a lack of resources, government interventions in several public health services, and payment delays have undermined the system's ability to guarantee treatment and medication delivery.

"Many people are going out to buy medications with their own money that they previously received through the healthcare system. From insulin to inhalers, they now have to allocate part of their income to cover these unforeseen expenses," says Arbeláez.

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This phenomenon has also led more citizens to enroll in prepaid medical plans or supplemental insurance, as a way to protect themselves against the failures of the mandatory system, generating new expenses for families.

Likewise, it should not be overlooked that access to credit, for both families and small businesses, is restricted, and that although inflation has dropped, interest rates remain high. For example, the Central Bank's benchmark rate remains at 9.25%, making open-ended loans, credit cards, and even home loans more expensive.

“Finally, one of the most worrying impacts, though less visible , is the increase in informal employment. Although the unemployment rate has dropped, more people are working without a contract, without social security, and without contributing to the pension system or the treasury,” the expert emphasized. With all of the above, Arbeláez indicated that “when the State cannot finance education, healthcare, or housing, many people have to go out and 'scram' on their own. And that means more informal jobs, less tax revenue, and greater social gaps,” which is no small matter.

This is why he concluded by stating that the fiscal crisis is no longer an issue exclusive to technocrats and economists and is now reflected in everyday decisions ranging from whether to buy medicine, enroll a child in university, or postpone a home purchase; making it clear that the cost of this imbalance in public finances is already reaching households.