Andean Group - July 2026

The victory of Abelardo de la Espriella in Colombia’s 21 June presidential run-off marks an abrupt and dramatic ideological shift for Latin America’s fourth-largest economy, only four years after it elected Gustavo Petro as its first left-wing president in modern times. Along the lines of other far-right leaders in the region, De la Espriella espouses aggressive deregulation, a dramatic reduction in the size of the state, and a tough stance on crime and violence.

The 47-year-old millionaire businessman and high-profile defence lawyer claims to have the policies to put Colombia back on the path of relative stability and growth that had made it one of the success stories of Latin America after decades of internal strife. His business-friendly economic platform includes tax cuts, a shrinking of the state apparatus by 40%, and boosting oil and gas production. In practice, however, the controversial, far-right political outsider with no experience in government faces a laundry list of challenges that will likely water down his objectives or potentially trigger a popular backlash.

Judging by the reaction of financial markets, investors are still weighing both scenarios. The initial response to De la Espriella’s victory was an extension of the rally that began after his strong showing in the first round on 31 May. To a large extent it reflected relief among investors over the prospect of fiscal discipline and business-friendly policies following four years of high volatility, increased borrowing, and state interventionism.

Then, a reality check set in that reflected the potential pitfalls of the man accused of having links to right-wing paramilitary groups, who used a military salute as his trademark campaign gesture but never served in the military, and whose business ventures outside of practicing the law reportedly had limited success. De la Espriella won by fewer votes than any president in modern Colombian history, will preside over a congress in which Petro’s left-wing Pacto Histórico has increased its presence and remains the largest party (despite lacking a majority), and inherits a budget deficit that may not accommodate his campaign promises and a security crisis that purely military responses are unlikely to solve. He may also need to grapple with Pacto Histórico’s capacity for mass mobilisations through labour unions and civil society organisations.

No majority

Dubbed ‘El Tigre’ (The Tiger) by his supporters, De la Espriella secured only a narrow victory following a deeply polarising election campaign. He edged out his progressive rival, Senator Iván Cepeda, by less than one percentage point – roughly 250,000 votes out of more than 25m cast. His Defensores de la Patria movement holds no seats in congress because it was not a registered party at the time of the March legislative elections, and the makeshift substitute party that endorsed him, Salvación Nacional, has one seat in the lower chamber of congress and four in the senate.

De la Espriella will, however, count on the support of the main right-wing party, Centro Democrático (CD), of former presidents Álvaro Uribe (2002-2010) and Iván Duque (2018-2022), which has positioned itself as his main congressional ally. CD’s presidential candidate, Paloma Valencia, came third in the election’s first round and endorsed De la Espriella in the run-off.

The lack of a right-wing majority means that De la Espriella will need to win the support of centrists and “will have to tone down some of his more incendiary rhetoric and potentially water down a part of his ambitious agenda to succeed,” Sergio Guzmán, director of Colombia Risk Analysis, noted in an assessment published by the Atlantic Council think tank. Guzmán wrote that “once in office, De la Espriella will face severe governance hurdles; lacking automatic legislative majorities, his party must build coalitions with traditional moderates.”

Fiscal challenges

Compounding the difficulties he will face, De la Espriella faces an economy burdened by fiscal strains, structural bottlenecks, and a deeply divided electorate. The incoming administration faces the challenge of having to plug a daunting budget deficit, while also meeting its campaign promise of cutting taxes and financing emergency measures.

In the last two years the Petro administration missed the official budget target and in June last year it suspended the fiscal rule established in 2011 that imposes limits on government spending and debt. As a result, the country’s credit rating was downgraded in June 2025 by the ratings agencies Moody’s and S&P Global.

Colombia posted a fiscal deficit of 6.4% in 2025 and the finance ministry in June raised its 2026 deficit target from 5.1% to 5.3%. De la Espriella’s team claims that the true figure for this year is likely to be substantially higher, at 7-8% of GDP. Colombia’s fiscal oversight body, the Comisión Autónoma de la Regla Fiscal (Carf), has warned that the incoming government will need to cut spending or raise revenue by 3.7% of GDP in 2027 to realign with the fiscal rule.

The incoming government will freeze government spending upon taking office on 7 August, according to De la Espriella’s designated finance minister, Miguel Gómez Martínez. “There was a four-year bender and now comes the hangover,” Gómez told news magazine Semana in an interview on 4 July, adding that he would become the government’s “Doctor No” for denying spending requests.

At the same time, the government will immediately require some Col$15-20tn (US$4.5-6bn) in emergency spending, according to Gómez. Priorities would be “a short-term strengthening of the military forces’ operational capacity to regain the initiative in controlling territory, settlement of the nation’s debts with power generators – because we must do everything in our power to prevent a blackout – and debt relief for the healthcare sector, to ensure the system does not collapse completely,” Gómez told Semana.

Gómez was previously dean of the faculty of economics at the Universidad del Rosario in Bogotá, deputy comptroller-general, and ambassador to France among many other jobs during a three decade-long career. The person in government who perhaps knows him best is Vice President-elect José Manuel Restrepo, who previously served as minister of finance (2021-2022) and trade, industry and tourism (2018-2021) during the Duque administration. “[Gómez] is a man with an academic background who is familiar with the business world, particularly regarding the financial system,” Restrepo told El Colombiano, describing him as “a competent man”.

In an attempt to alleviate the country’s financial quandary, Da la Espriella said on 2 July that he had instructed Gómez to renegotiate the country’s public debt with international banks and multilateral lenders. Seeking better maturity and terms for the debt that stands at historically high levels is one of several measures to help restore fiscal order and confidence ​in the economy, he said.

While subsidies provided to the vulnerable population will not be touched, the pool of beneficiaries will be reviewed to determine whether they should continue to receive state support, the incoming finance minister said. “There are people included who shouldn’t be there because oversight is inefficient, and sometimes political interests lead to the inclusion of individuals who do not belong on the list,” he said.

Potential backlash

How the De la Espriella administration handles such spending cuts will prove decisive as to its success or failure. Indeed, if the political pendulum swings too far and too fast from left to right, and the incoming administration focuses too much on austerity measures to achieve fiscal consolidation, it risks exacerbating the deep-seated social fractures that have historically fueled political instability in Colombia. The country’s Gini coefficient of 54.4 makes it the most unequal country in Latin America and the fourth most unequal in the world, according to the World Bank.

Decades of internal armed conflict are inextricably linked to the unequal distribution of land, where a small fraction of wealthy landowners holds the vast majority of arable territory. The 2016 peace accord with the Fuerzas Armadas Revolucionarias de Colombia (Farc) guerrilla group recognised comprehensive rural reform as a prerequisite for lasting stability. By pivoting entirely toward austerity and reducing the state’s social safety net, the incoming government could alienate the rural poor and informal urban workers who rely on public assistance. There are also major doubts regarding De la Espriella’s commitment to implementing the peace accords, which are still a long way from becoming reality. Petro’s right-wing predecessor, Duque, was also accused of undermining the agreement.

Equally, De la Espriella’s proposed ‘mano dura’ (iron fist) approach to security – which includes building Salvadorean-style mega-prisons and resuming the controversial aerial fumigation of coca crops with chemical herbicides – could trigger blowback. Stripping rural communities of alternative livelihood programmes while deploying aggressive military force without addressing underlying poverty has frequently driven vulnerable populations back into the arms of guerrilla forces and criminal organisations.

These concerns were underlined by credit ratings agency Fitch in a June report, which stated that “social protests are a risk, particularly to De la Espriella’s plans to cut spending and to adopt a tougher security stance”.

The economic blueprint

• Energy: Central to his platform is the reversal of the Petro administration’s ban on new oil and gas exploration contracts. Colombia relies heavily on fossil fuels for its fiscal health, with crude oil and coal accounting for roughly half of the nation’s total export revenues. The president-elect has vowed to greenlight suspended exploration projects and aggressively promote natural gas drilling, alongside rare-earth mining. He has promised a “cleaning out” of state oil company Ecopetrol, to strip it of alleged bad management and corruption.
• Downsizing: Cutting the size of the state apparatus by up to 40%, consolidating ministries from 19 to around 10, eliminating 700,000 public sector roles, and merging redundant agencies. Eliminating taxes such as those on gasoline and financial transactions.
• Fiscal Austerity: Restoring adherence to the fiscal rule, and strengthening the Carf fiscal oversight body. Boost revenue by simplifying the tax code and modernising the tax authority with AI to address evasion. Cutting public spending and reducing corporate tax burdens to stimulate private sector investment.
• Labor reform: Reduce hiring costs for businesses to incentivise formal employment in an economy where informal labor exceeds 50%.
• International realignment: Stronger ties with the US, including integrating Colombia into Washington’s ‘Shield of the Americas’ anti-cartel initiative, and updating trade agreements between the countries.