Colombia declares an economic emergency in a criticized effort to raise more taxes
BOGOTA, Colombia (AP) — Colombia’s government has declared a state of economic emergency that allows President Gustavo Petro’s administration to issue taxes by decree, as the country struggles to fund hospitals and the military while paying off record debts.
Petro issued the decree Monday evening. His left-wing government recently failed to win congressional approval for a tax bill that would have increased the government’s budget by $4 billion in 2026, a year marked by presidential and parliamentary elections.
Public spending under Petro, elected in 2022, has soared to levels that exceed spending during the pandemic. The Colombian national government has a budget of approximately $134 billion in 2025.
The decree says the government needs more funds to pay for fuel subsidies, cover health insurance payments and invest about $700 million in infrastructure that will allow the military to counter drone attacks by rebel groups.
The government has not yet published a law specifying the taxes it wants to impose under the emergency. Documents leaked by local media last week show the government is considering imposing new wealth taxes on businesses and individuals and imposing a high sales tax on alcohol, including rum and wine.
Business associations sharply criticized the order, which they called authoritarian and designed to circumvent congressional oversight.
Bruce Mac Master, president of the National Association of Industrialists of Colombia, said on social media that the decree constituted a “blatant abuse of the rule of law.”
Many analysts expect the Constitutional Court to overturn the decree. According to Colombian law, a state of economic emergency can only be declared in the event of a serious, imminent and unexpected threat to the country’s economic order.
Jorge Restrepo, an economics professor at Bogota’s Javeriana University, said it will be difficult for the government to convince Colombia’s highest court that its decree meets legal requirements.
“It was not an unexpected situation … like a war or a natural disaster,” he said of the current budget deficit. “We knew a budget crisis was brewing since the middle of last year.”
