LatinNews Daily - 04 August 2025

*The International Monetary Fund (IMF) has released a statement after concluding an Article IV consultation to Colombia, in which it highlights that while “growth has strengthened and inflation has declined, fiscal challenges persist and private investment remains subdued”. According to the IMF statement, following GDP growth of 1.7% in 2024, Colombia’s economy grew by 2.7% in Q1 2025, “driven by private consumption amid a robust labor market and a strong services sector”. Meanwhile annual inflation declined to 4.8% in June, down from 5.05% the previous month, “supported by appropriately tight monetary policy”. The same IMF statement highlights that the central government’s overall fiscal deficit rose to 6.7% of GDP in 2024, up from 4.2% of GDP in 2023, resulting in gross public debt rising to 61.2% of GDP by end-2024. The IMF says that this underscores the need for “sustained efforts over the medium-term as envisaged in the most recent Medium Term Fiscal Framework (MTFF), where the authorities also made use of the escape clause of the fiscal rule to recalibrate the fiscal path for 2025-27”. This saw the Colombian government led by President Gustavo Petro announce in June a three-year suspension of the ‘fiscal rule’ that limits government borrowing, with the government now expecting the fiscal deficit for 2025 to reach 7.1% of GDP, up from its original estimate of 5.1%. The IMF forecasts that Colombia’s real GDP growth will come in at around 2.5% this year, while inflation is expected to continue declining and reach the 3% target by early 2027, which it says is “contingent on the continued implementation of prudent monetary policy”.

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