Colombia

Economic growth is expected to accelerate moderately in 2026

Although forecast to come in slightly higher, Colombian economic growth in 2026 is expected to remain moderate, but more balanced and sustainable than in previous years. Household consumption (73% of GDP) will continue to be the main driver of activity, boosted by a fresh increase in the real minimum wage, which will support real income. However, this stimulus to demand will also keep inflationary pressures high. With purchasing power improving slightly, this will end up boosting services (retail and transportation), which together account for more than half of GDP. However, this dynamism is expected to occur in the context of household caution, as debt levels remain high and prices relatively elevated. Moreover, to contain inflation without stifling activity, BanRep is expected to implement a gradual monetary easing stance, reducing its benchmark interest rate by year-end. High real interest rates will continue to limit credit and productive investment. The weaker fiscal situation reduces room for expansionary policies and raises concerns about the sustainability of public finances. Even so, the possible election of a more market-friendly and fiscally conservative government would tend to restore business confidence, thus boosting investment. On the production side, the industrial and construction sectors could see a gradual recovery with the resumption of some energy and logistics infrastructure projects.

Colombian exports in 2026 are also expected to show moderate growth, in line with the gradual recovery of the global economy. The country’s export structure, heavily concentrated in energy and mineral commodities, will continue to be built on oil, coal, and gold, which together account for more than 50% of external sales. The expectation is that international demand for energy will remain relatively strong, benefiting Colombia with durably high prices and sustaining the trade surplus of these products. Beyond the extractive sector, other segments are expected to gradually gain ground. The agricultural sector, a traditional player in Colombia’s foreign trade, is likely to strengthen with the solid performance of coffee, flowers and tropical fruit exports, driven by the high quality of the products and increased demand in European and North American markets. Growth in service exports, especially in tourism and information technology, stands out as a positive development. Tourism is expected to benefit from improved perceptions of safety in regions previously affected by violence, and the digital industry is likely to expand its exports of software and outsourced services, taking advantage of the urban workforce’s increasing qualification levels.

Benign current account deficit but challenging budgetary situation in 2026

Colombia will continue to rely heavily on a commodity-based export profile. Commodities account for more than half of foreign sales and remain the main source of foreign exchange inflows. The recovery of international tourism and the steady flow of remittances sent by Colombians living abroad and especially in the US, will also serve as important stabilisers, helping to mitigate the impact of the trade deficit. However, limited productive diversification and the weak performance of manufactured exports are restricting the country’s ability to generate foreign exchange during periods of declining commodity prices, making the external sector vulnerable to international fluctuations. Imports, in turn, are expected to grow at a fast pace, driven by rising income, a partial recovery in infrastructure investments, and the appreciation of the real exchange rate, which makes foreign goods relatively more affordable. Refined fuels, machinery, and industrial equipment are likely to lead this trend, further widening the trade deficit. Regarding external financing, Colombia will continue to attract foreign direct investment (FDI), particularly in the energy and mining sectors. In addition, the country will maintain a robust position in international reserves, with a total of USD 67 billion expected at the end of 2025, the equivalent of 9.9 months of imports. Which ensures exchange rate stability and reduces the risk of external imbalances. Overall, Colombia’s current account in 2026 is expected to show a structural, yet sustainable, deficit. This outcome reflects a balance between expanding domestic consumption and the resilience of commodity and service exports.

In the fiscal arena, Colombia faces one of the greatest challenges of its recent economic policy due to the widening deficit, although the latter could decrease slightly in 2026. The deficit figure highlights the difficulty of containing public spending in the face of economic slowdown and social pressures. The budgetary side reflects this fragility: mandatory expenditures continue to grow, driven by increases in the minimum wage, automatic pension adjustments in, health care, and regional transfers, as well as the expansion of social programmes. As the government seeks to increase tax collection through tax reforms, the excessive focus on revenue generation, without making significant spending cuts, has limited impact on fiscal consolidation. Gross government debt is expected to reach a higher share of GDP in 2026, approaching the maximum limit established by the fiscal rule (71%), which was suspended in 2025 until 2027 using an “escape clause.” The rule, by imposing a debt ceiling, forces the government to reduce its annual deficit to keep debt within that limit. This trajectory worries the market and credit rating agencies as it highlights a structural imbalance between revenues and expenditures, which will require the next government to implement more stringent austerity measures.

President Petro will continue to face internal pressure until the end of his term in 2026

In June 2022, Gustavo Petro became President after securing 50.44% of the valid votes in the election second round. Petro, a former member of a now-demobilized rebel group, was the candidate of Pacto Histórico por Colombia (PHxC) coalition, an alliance of left-wing parties and movements launched in February 2021. His four-year term will end in August 2026, and, as laid down by the Constitution, he will be ineligible to run again in May 2026. As the first left-wing president in the country’s recent history, Petro came to power promising profound transformation, focused on social justice, “total peace” and energy transition. However, his government has faced numerous internal and external challenges that are undermining its stability and effectiveness. When Petro’s approval rating dropped (29% at the start of November 2025), the government lost much of the necessary support from the centre-left and centre factions in Congress.

The reforms proposed by the government have progressed unevenly. Labour reform was the only one to pass, albeit in a diluted form, after the rejection of broader measures such as a shorter working week. Pension reform, aimed at expanding coverage and creating solidarity pillars, has gained momentum with the approval of a new bill, which is now close to being passed. Healthcare reform, which seeks universality and a new institutional structure, is still in progress, while education reform remains stagnant. Tax reform is expected to advance partially, while the suspension of the Fiscal Rule until 2027 has been fully implemented, ensuring greater flexibility. Energy transition, although strategic for reducing dependence on oil and coal, faces strong resistance and low parliamentary support, and is still under discussion. Internal security remains one of Colombia's greatest challenges, marked by persistent armed violence and the government's inability to consolidate control over large areas of the country. The “total peace” project, President Petro's main flagship policy, has proven largely ineffective after being in force for almost three years. The policy sought to negotiate simultaneously with various armed groups (ELN, FARC dissidents, etc.) and criminal gangs, but in practice resulted in the territorial expansion and strengthening of these organisations, which took advantage of reduced military actions to expand their influence in rural areas, where coca cultivation often prevails, and over drug trafficking routes. Their advance has led to higher homicide rates, forced displacement and extortion, which has undermined the government's credibility with the population and exacerbated the climate of insecurity. Although Petro has recently resumed some military operations to contain the advance of armed groups, institutional fragility and a lack of coordination between security forces and local authorities compromise the effectiveness of these actions. The failure of the “total peace” project has not only exposed the government's limitations, but has also become one of the main factors in the political erosion of the left and the strengthening of the conservative discourse of security and order in the 2026 elections.

Looking ahead to 2026, the electoral scenario is characterised by deep uncertainty and unprecedented fragmentation. The prevailing trend suggests that a centre-right candidate is more likely to win, given public dissatisfaction with the current administration and growing demand for more moderate alternatives. The legislative elections, scheduled for 8 March 2026, will seek to determine 103 senators and 183 representatives. The proportional representation system using the distributing quotient will remain in place, which encourages party diversity but also contributes to congressional fragmentation. Expectations are that the 2026–2030 Congress will be even more fragmented, and that “Petrismo” will be weaker and centre and right-wing forces will become stronger.

Clash between Presidents Petro and Trump

In foreign policy, Colombia is experiencing a period of intense diplomatic tension with the US, its main historical partner. Relations deteriorated rapidly after a series of statements by President Petro, who openly criticised US military actions against vessels allegedly transporting drugs in the Caribbean Sea and Eastern Pacific, and even called on US soldiers to disobey President Donald Trump's orders, which resulted in the temporary revocation of his visa in September 2025. In response, Trump labelled Petro an “illegal drug leader” and threatened to impose new tariffs on Colombian exports—although he has yet to officially implement them. In addition, the US government revoked Colombia's certification as a partner in the fight against drugs, a measure that could weaken the flow of bilateral cooperation and affect security aid to the country, equivalent to about 0.1% of GDP, although President Trump immediately issued a waiver. This clash between the two presidents has kept to the realms of threats rather than action. Notwithstanding, Colombia is looking for closer diplomatic ties with China – it joined Belt and Road Initiative in May 2025 – and has reinforced security dialogue with Venezuela. Tensions may ease after the elections.

Payment

The invoice is the security title most frequently used for debt collection in Colombia. When a sale has been made, the seller ought to issue one original invoice and two copies. The original must be kept by the seller to be used for legal issues. One copy is then handed to the buyer, and the other is kept by the seller for accounting records. Likewise, in Colombia, the implementation of the electronic invoice was regulated, which is a document that supports transactions for the sale of goods and / or services that operate through computer systems that allow compliance with the characteristics and conditions established in relation to the expedition, receipt, rejection and conservation. They always have an equity value with credit, corporate or participation content and tradition or representative of merchandise.

Other payment methods used in Colombia are bills of exchange, cheques, promissory notes, payment agreements, bonds, bills of landing, or waybills. They are commonly used in domestic business transactions, and tend to be considered as debt recognition titles that can facilitate access to fast-track proceedings before the courts.

Bank transfers are developing rapidly in Colombia. SWIFT bank transfers are an increasingly popular method of payment for international transactions. For large-value transactions, payments are made through a national interbank network called SEBRA (Electronic Services of the Bank of the Republic), which uses a real-time settlement system. SEBRA in turn uses two systems: CEDEC (cheque clearing system) and CENIT (national electronic interbank clearing). For small-value payments, cash and cheques predominate.

The most used payment method in Colombia is bank transfer for business transactions and checks in smaller proportion, cash is a method used in Colombia but more associated with small businesses, in our case, we do not receive cash payments.

Currently, Colombian companies are implementing electronic invoicing according to resolution n ° 20, March 2019. The service company already has the electronic billing system, while the insurance company's project is suspended by the regulator, that means that the electronic invoice is considered as a debt recognition title to bear a legal right on a service or a good.

There are other forms of payment such as bills of exchange, promissory notes, payment agreements, bonuses, landing letters or road maps. They are commonly used in national business transactions however it does not apply for our business.

By last, foreign currency billing is permitted among tax residents in Colombia for some type of operations, the reinsurance and insurance operations are part of these, so we can issue a foreign currency policy for the export line of business, having said that, we can also make and receive claims payments in foreign currency.

Debt Collection

Amicable phase

The amicable phase is a recommended alternative to formal proceedings. Under Colombian law, conciliation or mediation hearings before commencing formal proceedings are mandatory. Pre-trial mediation must also be conducted in administrative litigation.

The creditor begins the amicable recovery process by reminding the debtor of the debt owed over the telephone. If this is unsuccessful, through an email or a registered letter the creditor subsequently requests immediate payment of the debt. If the debt is paid, the debtor will not bear the penalty interest, charges nor legal fees.

Legal proceedings

Fast-track proceedings

When the debt is certain and undisputed (such is the case for a bill of exchange), the creditor can initiate summary proceedings to obtain a payment order. The debtor must comply with the decision within 10 days or submit a defence.

Ordinary proceedings

The debtor must be notified through a writ that the judge has authorized the proceedings. The debtor must then answer the claim within 20 days. If the debtor fails to do so, the judge can render a default judgment depriving the defendant from their right to appeal. Otherwise, the court will invite the parties to attend a mediation proceeding in order to reach an agreement. If an agreement cannot be reached, the parties will present their arguments and evidences. Afterwards, the court will render a?decision.

In principle, first instance decisions ought to be rendered within a year, while Courts of Appeal will render these within an additional six months period of time. Nevertheless, in practice, Colombian courts are unreliable, and it can take up to five years to obtain a first instance ruling and ten years for a full disputed lawsuit.

0

Enforcement of a Legal Decision

Domestic judgments become enforceable when all venues of appeal have been exhausted. Compulsory enforcement occurs through the seizure and auctioning of the debtor’s assets. Nevertheless, collection of the debt from a third party is possible through a garnishment order.

For foreign awards, domestic courts will normally enforce them provided that they have been recognized by the Supreme Court through the exequatur procedure. Colombian courts will not recognize foreign decisions issued in countries which do not recognize Colombian decisions.

Insolvency Proceedings

Insolvency proceedings in Colombia are ruled by the 2006 Colombian Insolvency Act, which sets out reorganizations proceedings and judicial liquidation proceedings.

In cases of insolvency or bankruptcy, the process must be filed with the Superintendencia de Sociedades with the requirements of the law 1116 of 2006. The case will then be assigned to an agent or liquidator, according to the situation of the debtor company.

OUT-OF COURT PROCEEDINGS

Debtors may discuss debt restructuration agreements with their creditors before becoming insolvent. The final agreement must be validated by an insolvency judge.

REORGANIZATION

The proceedings start by filling of a petition by the debtor, one or more of the creditors, or by the Superintendent. If admitted, the debtor is deemed insolvent and all enforcement claims are stayed. The reorganization plan is submitted by the debtor, and the creditors and the judge must approve it. The court may designate a “promoter” in order to manage the business.

LIQUIDATION

This occurs as a result of a failure to reach a reorganization compromise, or when the debtor has failed to abide by the negotiated terms. It can be requested by the debtor and the creditors. A liquidator is appointed to establish a list of creditors’ claims and to manage the estate’s liquidation.

Last updated: November 2025