Structural reforms would be the way to get fiscal stability out of jeopardy.

The country is going through a decisive moment in fiscal matters, following the presentation of the Medium-Term Fiscal Framework (MFMP) by the Ministry of Finance on June 13, which raised alarm among economic analysts due to its impact on economic dynamics and investor confidence.

One of the most forceful has been Henry Amorocho Moreno, a professor of Public Finance and Budget at the University of Rosario, who maintains that Colombia's fiscal situation is unsustainable and that the government's strategy fails to address the structural problems that have brought the country to this critical point.

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In a recent analysis by the University, the expert points out that the fiscal deficit rose from 5.1% to 7.1% of GDP, a jump of two percentage points that reflects the application of the escape clause, by which the fiscal rule was suspended for three years. He emphasizes that this decision, according to Amorocho, far from solving the problem, dangerously postpones it, leaving the country with a greater level of vulnerability to international markets.

Added to this is the possibility that the government will request a new $38 billion debt limit from Congress in the 2026 budget proposal, a decision that has raised concerns among rating agencies, especially Fitch Ratings, which has already warned about the country's fiscal deterioration and rising sovereign risks.

"The country is heading toward a precipice if deep structural measures are not adopted. More spending, more debt, and stagnant income are not a sustainable formula," Amorocho asserts.

Income that doesn't take off

One of the most critical points of the analysis is the weakness of the tax system, as the MFMP reveals that revenue growth over the next five years will be minimal, just between 0.4% and 0.9% of GDP. According to Amorocho, this figure demonstrates a lack of effectiveness in fiscal management.

“Even more worrying is the $40 billion gap between the revenue projections of the 2026 Budget and the MFMP. While the former estimated revenue of $321.6 billion, the fiscal framework adjusted it downward to $281.4 billion. This is not a technical error or a temporary variation. It is a sign that fiscal planning is seriously failing,” warns the professor.

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On the spending side, the figures are also worrying, projecting public spending at 24.4% of GDP in 2026, with no clear proposal for structural reform. Although a spending reduction of just 2.5% of GDP over five years is estimated, there are no signs of cuts in inefficient areas or a reorganization of the state apparatus. Furthermore, public debt is expected to fall only slightly from 61% to 60% of GDP over the same period, an improvement that Amorocho describes as marginal and cosmetic.

"It's not about cutting for the sake of cutting. What the country needs is a functional reform of the State, which eliminates duplication, improves spending efficiency, and ensures that every peso invested has a real impact on quality of life and economic growth," he explains.

Growth without momentum

Another key point in the analysis is the projected weak economic momentum. The MFMP estimates average annual growth of 2.8% over the medium term, just 0.1 percentage points above the growth expected for 2025. For Amorocho, this figure demonstrates the inability of current fiscal policy to boost economic growth.

"Fiscal sustainability isn't just an accounting issue; it's a matter of confidence, expectations, and long-term vision. With a stagnant economy, no fiscal system can sustain itself," he warns.

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Given this situation, Amorocho insists that the only responsible solution is to undertake structural reforms in both revenue and expenditure. Regarding taxation, he proposes a comprehensive review of the system: expanding the tax base, revising rates, eliminating inefficient exemptions, and strengthening tax administration. Regarding expenditure, he proposes functional audits of the State, reducing institutional duplication, streamlining subsidies, and modernizing budget management.

"What's at stake is the country's fiscal stability, but also its ability to grow, attract investment, and protect the most vulnerable. Without fundamental reforms, we're only postponing a bigger crisis," he concluded.