Colombia's Triple Crisis: Fiscal, Energy, and Health Troubles Await Next Government

Colombia Confronts Three Deepening Crises

Colombia’s next government will inherit not one but three acute crises that have deepened under President Gustavo Petro’s tenure: a public finance hole, an underpowered electricity grid, and a healthcare system on the brink of collapse. The numbers paint a stark picture. When Petro took office in 2022, public debt stood at around 895 trillion pesos—about 61.1% of GDP. By 2025, it had swollen to roughly 1,200 trillion pesos, or 64.4% of GDP, and is projected to reach nearly 1,300 trillion pesos by the end of 2026.

The fiscal deficit has ballooned from a pandemic-era 5.3% of GDP in 2022 to an estimated 6.5% for 2026. Debt service costs alone have more than doubled since 2019, from 52 trillion pesos (4.9% of GDP) to 113 trillion pesos (6.1% of GDP) in 2025. This relentless debt spiral leaves razor-thin space for public investment or emergency spending.

On the energy front, the government actively discouraged investment in reliable, firm power sources—oil, gas, thermal, and hydro—while betting heavily on solar panels. The result is a capacity shortfall that threatens power rationing, especially if the El Niño weather phenomenon intensifies. Financial troubles at electricity distribution and marketing companies, worsened by energy theft and unpaid subsidies, add to the fragility.

Meanwhile, the health system—once lauded for its pandemic response—lies in disarray. Insufficient government transfers led to an unprecedented crisis and the intervention of multiple health insurers (EPS). By 2025, accumulated debts from EPS to hospitals and clinics had reached roughly 26 trillion pesos, causing widespread service interruptions and medicine shortages.

How Mismanagement Rippled Through the Economy

The Fiscal Hole: A Decade of Deterioration

Colombia’s public finances were already strained before Petro, but the deterioration since 2019 is alarming. In that pre-pandemic year, debt was 50.3% of GDP and the deficit a manageable 2.5%. The current trajectory—debt approaching 65% of GDP and a deficit around 6.5%—puts the country in a vulnerable position. Rising global interest rates have amplified the cost of servicing that debt, which now consumes over 6% of economic output. This leaves the next government with little choice but to pursue a painful mix of spending cuts and tax reform, risking a political backlash and slower growth.

Energy Grid at Risk: The Capacity Gap

The energy crisis is a direct result of policy choices. By discouraging fossil fuel exploration and delaying new thermal and hydro projects, the government undermined Colombia’s firm generation capacity—the kind that can be called upon regardless of weather. The reliance on intermittent solar power, without adequate backup, exposes the grid to severe stress during dry spells or El Niño events. The financial woes of distribution firms, starved of revenue by theft and unpaid subsidy debts, compound the risk. Without rapid corrective action, businesses and households face the real prospect of rationing, which would choke economic activity and erode public trust.

Healthcare in Disarray: The 26 Trillion Peso Debt

The collapse of the health sector is perhaps the most visible human cost of administrative failures. By failing to cover the system’s costs and intervening in EPS operations, the government precipitated a cascade of unpaid bills. Hospitals and clinics, owed 26 trillion pesos, have cut services and halted medicine deliveries. The resulting health emergency places the new administration under intense pressure to restore liquidity and confidence, potentially requiring a multi-year financial rescue plan that further strains the fiscal budget.

Across all three crises, a common thread emerges: a government that pursued ideological goals—green energy transformation, expanded social spending—without securing the fiscal and regulatory foundations to support them. The next president will have to rebuild those foundations while managing the immediate fallout.

A Stabilization Roadmap for the Incoming Administration

For the Incoming Administration:

• Design a fiscal consolidation package that combines targeted spending cuts with a surgical tax reform, avoiding broad measures that stifle growth or overburden taxpayers. The 6.5% deficit must be reduced steadily to prevent a debt spiral.
• Immediately launch a plan to strengthen firm energy capacity—accelerating approved thermal and hydro projects, resolving financial blockages at distributors, and ensuring subsidy payments are current—to head off rationing during El Niño.
• Implement an emergency financial rescue for the health system, starting with a transparent audit of EPS debts and a liquidity injection to restore medicine supplies and hospital operations, while drafting a longer-term reform to prevent recurrence.

For Businesses and Investors:

• Energy-intensive sectors should prepare contingency plans for possible power rationing and reassess the reliability of grid supply in their operational planning.
• The likely tax reform and austerity measures will reshape the business environment; companies should model scenarios for changes to corporate tax rates, VAT, and subsidies.
• Healthcare sector participants—hospitals, pharmaceutical suppliers, insurers—must prepare for significant regulatory and financial restructuring, which could create both risks and new market opportunities.