Economy January 29, 2026

Colombian top court orders halt to Petro administration's economic emergency measures

High court pauses decree designed to shore up public finances while it weighs a final ruling

By Caleb Monroe
Colombian top court orders halt to Petro administration's economic emergency measures

Colombia's highest court has temporarily suspended an emergency decree enacted by President Gustavo Petro's government that allowed the executive to raise taxes and act by decree to address budget shortfalls. The measures, implemented in December after a tax reform failed in Congress, were intended to generate tens of trillions of pesos for the 2026 budget. The court's pause will remain in place until a final judicial determination is reached.

Key Points

  • Colombia's top court ordered a temporary suspension of an economic emergency decree enacted in December, pending a final ruling.
  • The decree had followed the failure of a tax reform bill that aimed to raise 16.3 trillion pesos ($4.45 billion) and had enabled higher taxes intended to raise 11 trillion pesos ($3 billion) for the 2026 budget; this directly affects public finances and fiscal policy.
  • A June revision raised the 2025 fiscal deficit target to 7.1% of GDP from 5.1%, a shift linked in the article to subsequent sovereign rating downgrades and implications for sovereign debt markets.

BOGOTA, Jan 29 - Colombia's Constitutional Court on Thursday ordered a temporary suspension of an economic emergency decree issued by President Gustavo Petro's government, instructing authorities to halt the measures while the court prepares a final decision.

The decree, which the administration activated in December, had been introduced after a tax reform bill failed to secure passage in Congress. The bill had sought to raise 16.3 trillion pesos ($4.45 billion), and the later emergency declaration gave the executive branch the authority to act by decree without congressional approval.

Under the emergency framework, the government moved to implement higher taxes intended to raise 11 trillion pesos ($3 billion) to help finance part of the 2026 budget. The court's order prevents further implementation of those measures until the judiciary reaches its conclusive determination.

The move adds another episode to ongoing fiscal pressure in Colombia. In June, authorities revised the 2025 fiscal deficit target upward to 7.1% of GDP from an earlier 5.1% target, a change that contributed to sovereign rating downgrades by ratings agencies.

President Petro had warned previously that suspending the economic emergency would increase the cost of the country's debt. Interior Minister Armando Benedetti publicly criticized the court's temporary halt, posting on X: "It's not right. By temporarily suspending the economic emergency, the mega-rich are being protected."

The court's interim action leaves open the possibility that the executive could regain authority to execute parts of the decree if the judiciary eventually rules in favor of the government. For now, the administration must refrain from proceeding with the measures that were designed to supplement fiscal resources for next year's budget.

The exchange rate used in reporting the peso figures is $1 = 3,665.97 Colombian pesos.


Context and next steps

The suspension is procedural and temporary, pending the court's final judgment. The ruling affects the administration's ability to implement immediate tax increases and other actions it considered necessary to plug budget gaps after the legislative defeat of the tax reform.

How the court ultimately rules will determine whether the government can resume the measures that were projected to raise part of the funds earmarked for the 2026 budget. Until that determination, the government faces constrained options for executing the components of the emergency decree.

Risks

  • Increased borrowing costs - The article notes statements by the president that suspending the emergency could make the country's debt more expensive, affecting sovereign debt markets.
  • Creditworthiness pressure - The earlier upward revision of the 2025 fiscal deficit target and resulting rating downgrades signal risks to Colombia's sovereign rating.
  • Legal and policy uncertainty - The court's pause creates uncertainty over the government's immediate ability to implement tax measures meant to fund part of the 2026 budget, affecting fiscal planning.

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