Colombia Budget Shifts Spending to Debt and Defense

Colombia’s Congress approved a 2027 budget of 634.9 trillion pesos, including 144 trillion pesos for debt servicing and 74.9 trillion pesos for defense, while institutions created to carry out the 2016 peace agreement face funding cuts. Lawmakers passed the bill in the early hours of Tuesday, Oct. 20, after debating the fiscal deficit and rising public debt.

The De la Espriella administration proposed the plan, its first major legislative victory. It raises funding from the 555.8 trillion pesos allocated for 2026 and exceeds by more than 10% the proposal submitted by former President Gustavo Petro’s administration, despite the new government’s pledge to cut state spending.

The largest claims on public funds

Debt servicing takes 144 trillion pesos, approximately US$45.7 billion. Finance Minister Miguel Gomez told lawmakers debt absorbs resources needed for investment. He argued that austerity and greater efficiency were required to correct the fiscal imbalance.

Education receives 93 trillion pesos, approximately US$29.5 billion, while health care gets 81.6 trillion pesos, approximately US$26 billion. Defense receives 74.9 trillion pesos, approximately US$23.8 billion. According to the article, that defense allocation reflects the administration’s security priority and its focus on the state’s operational capabilities in confronting illegal armed groups.

The national budget determines how public funds will be divided among debt obligations, public services, security and government institutions. The report says the final distribution seeks to balance executive priorities with legal obligations and spending commitments. Lawmakers also debated subsidies, investment and various institutions’ operating expenses.

Peace institutions face cuts

Some institutions established to implement the 2016 peace agreement with the former Revolutionary Armed Forces of Colombia (FARC) face funding cuts. Among them are the Special Jurisdiction for Peace (JEP), the transitional justice tribunal that investigates and prosecutes the most serious crimes committed during the armed conflict, and the Search Unit for Persons Presumed Missing (UBPD).

The reported cuts raised concerns about possible effects on judicial investigations, searches for missing people and victim identification, including in international proceedings. Earlier in October, the United Nations urged Colombia to uphold its commitments under the peace agreement reached a decade ago.

The Historic Pact, former President Gustavo Petro’s political movement and the main opposition force, criticized cuts to education programs and public institutions. It also objected to cuts affecting the National Learning Service (SENA), which provides free technical training across the country. The debate placed funding for education and public bodies alongside the government’s competing spending priorities.

Deficit and borrowing pressures

The Senate approved the bill late Monday night, with 57 votes in favor and two against. The House of Representatives passed it in the early hours of Tuesday, with 112 votes in favor and one against. Both chambers passed matching versions, completing the legislative process after an extensive day of debate.

The government estimates the fiscal deficit could reach 9.4% of gross domestic product in 2027, reflecting the gap between projected spending and revenue. Public debt continues to rise, and Colombia needs to restore financial market confidence. Colombia lost its investment-grade credit rating in 2021, which raised borrowing costs.

The administration has announced a fiscal reform called the Rescue Law, intended to reduce the projected deficit. The budget’s approval leaves questions about how the government will finance its priorities without adding to indebtedness or shifting adjustment costs onto public services and social programs. The approved allocations put debt, education, health, defense and peace-implementation institutions in the middle of that unresolved fiscal contest.