An International Monetary Fund (IMF) staff team has concluded its visit to Bogotá, Colombia, after holding discussions with Colombian authorities about the country’s recent economic performance and policy direction. The talks covered developments in growth, inflation, fiscal policy, and external balances.
The IMF noted that Colombia's economy is experiencing both improvements and ongoing challenges. Growth has picked up while inflation has fallen, but fiscal pressures remain and private investment continues to be weak. External factors are also contributing uncertainty to the outlook.
According to the IMF, Colombia’s economy expanded by 1.7 percent in 2024 and grew by 2.7 percent in the first quarter of 2025. This growth was driven mainly by private consumption supported by a strong labor market and services sector. Headline inflation dropped to 4.8 percent year-on-year in June due to tight monetary policy, though underlying price pressures persist.
The current account deficit narrowed to 1.7 percent of GDP last year as a result of strong remittances, lower dividend payments abroad, and lagging investment levels. The IMF stated that international reserves have increased further and remain at adequate levels. The financial system was described as sound and resilient.
However, the central government’s overall fiscal deficit rose from 4.2 percent of GDP in 2023 to 6.7 percent in 2024, pushing gross public debt up to 61.2 percent of GDP by the end of last year. The authorities used an escape clause under their fiscal rule to adjust their medium-term plans for managing public finances between 2025 and 2027 through the latest Medium Term Fiscal Framework (MTFF). For next year’s draft budget, officials are targeting an overall deficit of 6.2 percent of GDP—aligned with MTFF projections—and a primary deficit of two percent of GDP that would be mostly financed through a proposed tax reform.
Looking ahead, real GDP growth is projected at around two-and-a-half percent this year thanks partly to some easing on fiscal policy before returning toward potential over time. Inflation is expected to continue falling toward the three-percent target by early 2027 if prudent monetary policies remain in place.
The current account deficit is forecasted to widen somewhat this year—to about two-and-a-half percent of GDP—due partly to weaker terms of trade and higher fiscal deficits; it could reach as high as seven-point-one percent by end-2025 before declining if policies consistent with official budgets are implemented steadily.
Risks identified include global uncertainties such as geopolitical tensions that could affect growth through real or financial channels; stricter immigration rules abroad could reduce remittance flows; domestic uncertainty regarding implementation of reforms may further hold back investment.
“The team thanks the Colombian authorities for their warm hospitality and the productive discussions,” said IMF staff following the mission. “The IMF Executive Board’s consideration of the Article IV Consultation will take place in due course.”