Andean Group - September 2026

Seven weeks after northern Venezuela was devastated by powerful earthquakes, neighbouring Colombia was hit by a similar magnitude tremor. But, from damage to the emergency response, and from economic costs to political fallout, the two natural disasters couldn’t have been more different.

The earthquake that tore through the western department of Chocó on the morning of 10 August and had its epicentre near the small town of San José del Palmar sent shockwaves across western and central Colombia. With a magnitude of 7.4 on the Richter scale, it was the most powerful to hit Colombia in 27 years and was similar in force to the twin 7.2 and 7.5 magnitude earthquakes in Venezuela on 24 June that killed over 6,500 people.

But the seismic activity was far deeper than in Venezuela, meaning the shockwaves were less intense by the time they reached the earth’s surface. On the other hand, the shockwaves were felt across a large region, as far away as Ecuador, Panama, and Venezuela. Indeed, the geographic reach of the disaster made the initial response difficult to organise. According to Colombia’s disaster risk management unit (UNGRD), the earthquake affected 472 municipalities across 15 departments. President Abelardo de la Espriella, who took office just three days before the earthquake, said that one-third of the country had been affected.

Landslides triggered by the shaking blocked roads into some of the hardest-hit rural areas, hindering the arrival of medical and rescue teams and leaving communities without electricity, water, or basic services. According to the UNGRD, 36,336 homes were destroyed and a further 201,010 suffered damage. The death toll as of 3 September stood at 331. De la Espriella had previously said on 18 August that 285 health centres, 2,838 education facilities, and hundreds of bridges and other essential infrastructure had been damaged. In Cali’s university hospital, the paediatric and neonatal wings were badly damaged, and doctors converted its grounds into an improvised neonatal care unit. In Pereira, the ceiling of the airport partially collapsed, and passengers were trapped in a cable-car system above the city.

Political fallout

For a country that had barely turned the page on a bitter, closely fought election, the earthquake was an immediate and brutal test of governing capacity. President De la Espriella, a lawyer who campaigned on a promise of fiscal austerity and a hardline security crackdown, barely had time to unpack after taking office three days earlier. He had narrowly defeated left-wing senator Iván Cepeda in the 21 June run-off – a sharp rightward turn after four years under the left-wing former president Gustavo Petro (2022-2026).

De la Espriella’s broader economic programme centres on a smaller state, deregulation, lower taxes, and a revival of oil and gas production – a decisive break from Petro’s heavy-spending anti-fossil-fuel model. Petro, now positioning himself as head of the opposition Pacto Histórico movement, argued that the government’s initial response in the crucial first hours after the quake was badly mismanaged. Petro called on De la Espriella to seek a national agreement for a tax reform that he said would have to raise Col$20tn (US$6.4bn) for the earthquake response, and he urged the central bank to lower its benchmark interest rate, which he claimed would boost the government coffers by a further Col$10trn.

Unlike in neighbouring Venezuela, where the authorities faced widespread accusations of inaction and even obstruction, rescue efforts in Colombia were actually off to a quick start particularly in Cali even if less so in outlying regions.

The government also responded quickly with policy measures. De la Espriella announced rental subsidies for displaced families, suspended utility payments and tax filings in the affected zones, and tapped Housing Minister Jaime Andrés Beltrán to lead what officials are calling the “Reconstruction Miracle Plan” – a phased effort that starts with emergency housing assessments and rental support before moving into a second phase of subsidised social housing and a materials bank for repairs. On 20 August he declared a state of economic, social, and ecological emergency, a legal mechanism that gives the government broader latitude to redirect spending and fast-track relief measures.

The president also called for a larger “Marshall Plan” for Chocó, the country’s poorest department, referring to the US-led investment plan for Europe’s reconstruction after the Second World War. Although few details have so far been announced, the government has said that Chocó should be given special consideration in reconstruction efforts to compensate for the department’s long history of neglect.

De la Espriella did slip up a few times. Missteps highlighted by the opposition include the selective rejection of international aid seemingly based on ideological grounds, the dispatching of footballs branded with the name of his Defensores de la Patria party to the disaster zone, and gestures deemed in poor taste and more appropriate for a candidate on the campaign trail than a leader managing a crisis.  “No government performs well enough during a catastrophe like this. But in this case, the government’s track record so far is positive,” argued political consultant Andrés Mejía. “The president and his ministers are visible and appear effective. They have coordinated the response very well with local authorities, and their mistakes have been quickly clarified.”

Economic cost

The government initially put direct losses at about Col$30tn (US$9.6bn). Of that roughly Col$24.5tn relates to destroyed or damaged buildings and about Col$5.5tn to infrastructure. The government has been careful to frame the number as preliminary. It was announced on 17 August and was compiled by a private firm covering just five of the hardest-hit departments – Chocó, Valle del Cauca, Risaralda, Quindío, and Caldas. Subsequently, a rapid assessment published on 28 August by the United Nations Development Programme (UNDP) and the UNGRD placed the cost of direct physical damage to structures at US$13.28bn (Col$42.1trn) – equivalent to approximately 2.3% of GDP.

What most forecasters agree on is that the earthquake, while a serious humanitarian catastrophe, is unlikely by itself to derail the broader economy. According to Lumen Economic Intelligence, a Colombian consultancy, fallout from the earthquake will cut GDP growth this year by around 0.27 percentage points. However, it expects reconstruction efforts to lift the economy by roughly the same measure over the next two years, predicting boosts to growth of 0.20 percentage points in 2027 and 0.08 percentage points in 2028.

The problem is that the government will have to shoulder most of the reconstruction costs itself, and these land squarely on top of fiscal problems that were already severe. The government has received US$200m from the World Bank, and it has additional buffers available through emergency credit lines with international financial institutions.

Analysts caution, however, that these instruments are designed to cover the first weeks of emergency response, not the multi-year reconstruction effort that will follow – leaving a financing gap the government will need to close through some combination of new borrowing, budget reallocation, and private-sector participation.

De la Espriella has explicitly asked Colombia’s construction industry to contribute machinery and direct part of its profits toward housing projects, in an attempt to keep reconstruction from depending entirely on public funds. Meanwhile, Finance Minister Miguel Gómez has called on the banking sector to support reconstruction and economic revival efforts.

The initial market reaction to the earthquake was relatively sanguine. Following an initial dip, the Colombian stock index Colcap continued to rally to near all-time highs by late August. The peso, meanwhile, has enjoyed a strong run against the US dollar – partly due to high interest rates in Colombia and a weaker dollar, but also amid confidence that De la Espriella’s broader economic policies will lead to accelerated growth and improved public finances.

De la Espriella had campaigned explicitly on closing the government’s imbalance between revenue and expenditure through austerity rather than new taxes, and his finance team was already drafting a 2027 budget meant to signal fiscal discipline to markets and multilateral lenders.

Then, towards the end of August, came a much more sombre assessment by the government of the overall situation of public finances. But, oddly, the cost of the earthquake didn’t figure prominently in the new numbers. Rather, the government blamed a financial mess allegedly left behind by the previous administration.

Budget surprise

So on 27 August, the government unveiled a budget proposal to increase spending by a startling 14.2% year-on-year, for a total of Col$635trn. The problem is that the numbers still don’t seem to add up and don’t yet include additional spending for reconstruction yet.

The bulk of the additional spending is related to increased debt obligations and, to a lesser extent, pension outlays, fuel subsidies, and public-sector salaries. The budget implies a primary deficit, which excludes interest payments on debt, of 4.4% of GDP, more than double the 2.1% figure declared by the Petro administration for this year, which the new government says was inaccurate. More worrying is the actual spending gap, which includes debt servicing. In his review of the proposal, central bank governor Leonardo Villar warned that the fiscal deficit would hit 7.2% of GDP next year.

In essence, that entirely reverses the situation most people had expected. Rather than putting forward a spending plan that would shrink the need to take on new debt, De la Espriella has done the opposite. And now the real test becomes whether he can convince the general public and the investment community that he can still fix the country’s strained finances.

In an effort to do just that, on 1 September Finance Minister Gómez announced a Col$21.9trn (US$6.8bn) spending cut in this year’s budget, which was approved under Petro, so as to avoid a cash-flow problem. For next year too, the government will present an economic rescue bill that aims to reduce the 2027 fiscal deficit.