Colombia’s Petro administration leaves 58.5 per cent debt-to-GDP ratio ahead of May election

Colombia’s first left-wing administration, led by President Gustavo Petro, is concluding its four-year term with a mixed economic record that presents significant challenges for the incoming president. While the government has successfully reduced poverty and driven unemployment to a 25-year low of 10.9 per cent in January 2026, the country’s net debt has risen to 58.5 per cent of GDP. This fiscal burden, coupled with high-interest payments, limits the spending capacity of the next government as the nation heads to the polls on May 31.

The Petro administration’s social agenda centred on labour reform and educational access. A labour reform approved in June last year increased the minimum wage by 23 per cent, a substantial rise compared to the typical 5 to 10 per cent increases, and adjusted overtime pay regulations. Concurrently, the “zero tuition” programme launched in 2023 has benefited 870,000 students across 64 public institutions, covering up to 100 per cent of tuition costs for middle- and lower-income families. These measures have contributed to increased purchasing power, which some economists argue has stimulated the economy by outpacing inflation.

However, the fiscal cost of these social policies has been steep. Mauricio Salazar, an economist at the Fiscal Observatory at Javeriana University, noted that the administration increased debt by 400 trillion pesos ($109bn). The government’s attempt to raise 26 trillion pesos through tax reforms, including a wealth tax, was rejected by Congress. Consequently, the administration implemented portions of a temporary wealth tax for individuals and businesses. Salazar questioned the administration’s strategy for economic growth, stating that the data suggests a reliance on increased debt rather than sustainable investment attraction.

The economic landscape is further complicated by a deteriorating trade relationship with Ecuador. In February 2026, Ecuador imposed tariffs on Colombian imports, citing security concerns along the shared border. Colombia responded with reciprocal tariffs, which the Andean Community later declared illegal. The dispute has resulted in an estimated 5,000 job losses in the border region and affected at least 2,700 Colombian companies, particularly in the auto sector. This diplomatic friction has exacerbated investor mistrust, adding to the uncertainty surrounding the country’s economic outlook.

Voters on May 31 will choose between two divergent economic paths. Left-wing candidate Ivan Cepeda, a veteran congressman and ally of Petro, supports continuing the social and energy transition policies, including a shift toward renewable energy and investment in the rural economy. In contrast, far-right outsider Abelardo de la Espriella advocates for reduced government spending, lower corporate taxes, and the revival of fossil fuel extraction, including fracking. The incoming president must navigate the high debt load while addressing the security and trade disputes that have emerged during Petro’s tenure.