The International Monetary Fund has suspended Colombia’s access to a $9.8bn flexible credit line, citing a deterioration in fiscal discipline and a sharp rise in public debt, a move that triggered political controversy and stoked fears over the country’s financial resilience.
The decision marks a significant shift for Colombia, which has long been considered a Latin American model of macroeconomic stability. The flexible credit line (FCL) was first granted to Colombia in 2009 and has served as a critical precautionary buffer against external shocks. Its suspension suggests the IMF no longer considers the country in compliance with the fiscal soundness required to retain access to the instrument.
In a statement on Friday, IMF Communications Director Julie Kozack said Colombia’s continued access to the FCL beyond April 26, 2025, will depend on the outcome of the ongoing Article IV consultation and a forthcoming mid-term review. “Public deficits and public debt have risen more than expected,” the IMF said, pointing to a fiscal deficit of 6.7 per cent of GDP in 2024 — significantly higher than the government’s medium-term target of 5.6 per cent and up from 4.2 per cent the previous year.
The multilateral lender noted that falling tax revenues and higher primary expenditure had contributed to the worsening fiscal outlook, even as the government enacted spending cuts in late 2024. Liquidity constraints also led to the accumulation of budgetary arrears amounting to 2.8 per cent of GDP, which the government is now working to clear, placing additional pressure on 2025 resources.
The suspension, while technically procedural pending further IMF evaluations, was interpreted by markets and analysts as a de facto signal of lost credibility. “The IMF is essentially saying that Colombia no longer meets the high qualification standards required for the FCL,” said one Bogotá-based economist, noting that the country now risks higher borrowing costs amid global financial tightening.
Gross public debt climbed to 61.3 per cent of GDP by the end of 2024, up from 56 per cent the previous year. The peso has also come under pressure, contributing to wider sovereign spreads compared with regional peers.
The political reaction in Colombia was swift and divisive. President Gustavo Petro, whose government has faced persistent scrutiny over its tax reform plans and public spending, responded to the IMF announcement with a personal attack on its managing director, Kristalina Georgieva. In a post on X, formerly Twitter, Petro wrote: “The vampires are coming, but vampires disappear in the sunlight, Georgieva.”
His remarks were widely condemned by opposition lawmakers and economists, who accused the president of undermining the seriousness of the country’s economic challenges.
“This is not the time for flippant metaphors,” said Senator María Fernanda Cabal of the conservative Democratic Centre party. “The president is publishing nonsense at a time of grave national concern.”
Mauricio Cárdenas, Colombia’s finance minister from 2012 to 2018, said the suspension of the credit line sends the worst possible signal to financial markets. “We’ve lost the spare tyre of our economic car just as the global road gets bumpier.”
The economist also noted that the flexible credit line was the biggest insurance policy of the Colombian economy. “Losing it means the IMF sees us as fiscally unprepared. Tough times are coming.”
Fellow former finance minister José Manuel Restrepo under President Iván Duque described the IMF’s decision as “bad news” for Colombia. “The FCL has historically signaled confidence in our macroeconomic policy. If we lose that backing, it suggests serious concerns over fiscal management.”
Colombia was granted access to the FCL in 2022 for a two-year period, reaffirmed in 2024, as part of a broader strategy to safeguard against external volatility. The IMF previously described the credit line as a “strong precautionary instrument” available only to countries with “very strong” policy frameworks and track records.
Experts warn that Colombia’s ability to regain the line will hinge on a successful mid-term review expected between September and October 2025. Should the IMF determine that Colombia still falls short of the required fiscal strength and macroeconomic consistency, the FCL could be permanently withdrawn.
The Colombian government has yet to provide a detailed response beyond the president’s post. However, finance ministry officials are expected to meet with IMF staff again in the coming months as part of the consultation process.
The loss — or suspension — of the FCL may not create an immediate liquidity crisis, analysts say, but it significantly weakens Colombia’s external position at a time when global risks are rising and market sentiment toward emerging markets remains fragile over U.S President Trump’s tariff declarations.
“Colombia’s macro framework has taken a reputational hit,” said a former central bank official. “This isn’t about borrowing the money, it’s about the trust behind it — and right now, that trust is fraying,” stated Kozack.
