Adding to these concerns is the delayed routine review of Colombia’s economic status, known as the Article IV consultation. According to José Ignacio López, President of ANIF, this delay stems from doubts regarding the credibility of the government’s fiscal figures, particularly the 2025 deficit target of 5.1 percent of GDP.

Saturday, Julie Kozack, spokesperson for the IMF, issued a statement saying:

“From April 26, 2025, Colombia’s continued qualification for the IMF’s Flexible Credit Line (FCL) is contingent on the completion of both the ongoing Article IV consultation (see staff statement issued on April 18, 2025) and a subsequent FCL mid-term review. The FCL arrangement was approved on April 26, 2024, for two years with a mid-term review to assess continued qualification.”

The press release clarified that the FCL was approved for two years, until April 26, 2026, “with a midterm review to assess the continuation of qualification.” Since the midpoint of this period has passed and the midterm review has not commenced, Colombia cannot access the FCL resources, despite maintaining the borrowing limit, until these two requirements are met.

“It cannot be used until the government presents a credible fiscal plan. In other words, it was on autopilot, and now the IMF says there is too much fog, and they prefer to land to avoid risks. They will not lend money to a government that squanders,” commented former Minister of Finance, Mauricio Cárdenas.

As approved by the IMF on April 26, 2024, the available amount for Colombia under this new quota is approximately $8.1 billion USD for crisis prevention.

Colombia has had access to this FCL since 2009, usable at any time. The only instance of its use was during the COVID-19 pandemic. In December 2020, Colombia disbursed approximately $5.4 billion USD to meet balance of payments’ needs and address pandemic consequences.

FMI suspende la línea de crédito para emergencias que tenía Colombia desde 2009. Es el peor mensaje para los mercados financieros.

Nos quedamos sin llanta de repuesto justo cuando la economía mundial está llena de incertidumbres. La línea de crédito flexible era el mayor seguro…

— Mauricio Cárdenas S. (@MauricioCard) April 26, 2025

However, these resources are now unavailable due to the IMF’s suspension. This development coincides with the IMF’s recent downward revision of Colombia’s economic growth forecast for 2025, from 2.5 percent to 2.4 percent. According to Luis Fernando Mejía, Executive Director of Fedesarrollo, this decision reflects the severity of Colombia’s fiscal situation, with a 2024 deficit of 6.8 percent of GDP, the third-highest in 120 years.

The fiscal rule was also breached in 2024, and the 2025 deficit target of 5.1 percent of GDP lacks market credibility.

“It is the worst message for financial markets. We are left without a spare tire just when the global economy is full of uncertainties. The Flexible Credit Line was the biggest insurance the Colombian economy had. The IMF is viewing Colombia’s situation very negatively. Difficult times are coming,” said Mauricio Cárdenas.

Former Minister of Finance and Rector of Universidad EIA, José Manuel Restrepo, stated that the IMF’s decision creates a scenario of increased uncertainty, potentially raising the country’s risk premium and public financing costs.

“We saw this in recent Colombian placements, which are between 30 and 50 percent more expensive than the historical financing cost of the National Government,” he said.

This would lead to higher interest payments on public debt, a higher exchange rate, and reduced space for productive and social investment in the national budget.

No es buena noticia para Colombia 🇨🇴!! La línea ha sido siempre un respaldo y confianza en la política macroeconómica. Respaldaría eventualmente al país en una situación coyuntural difícil como sucedió en la pandemia parcialmente, y perderla o supeditarla a otras decisiones,… https://t.co/He3GmD4WyN pic.twitter.com/RvBO6I5Lx4

— José Manuel Restrepo Abondano (@jrestrp) April 26, 2025

“The effect will be clearer on the Colombian peso, because this Flexible Credit Line is understood as a possibility of having contingent international reserves. Probably, this Monday at market opening, we will have a weaker Colombian peso,” predicted José Ignacio López.

While the FCL suspension is concerning, José Ignacio López believes the government has options for resolution, as it is not a definitive decision.

“The government still has limited room to maneuver to send a message of fiscal adjustment that allows closing the Article IV and keeping the Flexible Credit Line open until April 2026. The government must present a credible fiscal plan. The fiscal situation is deteriorating, and protecting that credit line is key in the current situation,” he added.

Luis Fernando Mejía also stated that the IMF’s decision is a further warning for the government, reinforcing the urgent need to cut the 2025 national budget. This cut would need to total 40 trillion pesos to avoid another breach of the fiscal rule and resume the path of deficit and public debt reduction.

The Ministry of Finance has stated that it is analyzing Colombia’s fiscal situation and “advancing in the implementation of economic measures that consider the evolution of domestic and external economic conditions, as well as compliance with the goals included in the National Development Plan.”

Photo credit: IMF/Melissa Lyttle/Facebook.

The government’s aim is to boost state revenues in the short term, but the plan is already drawing criticism for its potential long-term consequences, as it may lead to long-term fiscal complications while shifting the burden onto future administrations.

According to La República, Colombian economic-financial newspaper, the reform is projected to generate between $1.6 million and $4.6 million USD, depending on implementation: Luis Fernando Mejía, director of economic think tank Fedesarrollo, estimates the change would effectively advance about 0.8% of the country’s GDP in 2026 taxes. He noted that this amount closely mirrors the tax reform proposal that failed in Congress in December 2024. The measure would impact numerous economic sectors, including coal extraction, which would face a hike from 3.2% to 5.5%, and oil, jumping from 5.6% to 7%.

The announcement triggered an immediate response from Representative Katherine Miranda (Congresswoman in the lower house of the Congress), who condemned the plan. She accused the government of irresponsibility, pointing to its spending abroad while proposing austerity at home.

“They’re spending more than $11 million USD on fake houses in Japan, $600 billion COP on a consultation to campaign and they want to defund the next government”, Miranda wrote on X following the announcement. Miranda’s comments echo those of Senator María Fernanda Cabal (Congresswoman in the upper house of the Congress), who earlier that day denounced what she called “wasteful and unaccountable” foreign expenditures under the guise of promoting Colombia, after the investment of $11,200,000 USD in a government-backed cultural and diplomatic space established by the Colombian Ministry of Foreign Affairs in Japan as part of the Expo 2025 Osaka

“Petro’s government spent more than $11 million USD on the ‘Casa Colombia’ in Osaka, Japan. It’s outrageous to see how they deny funding for medicines, housing subsidies, and education, yet they provide millions of dollars for a house in Osaka, Japan,” Cabal said in an X post.

According to Cabal, more expenditures with the same purpose were done for the ‘Casa Colombia’ initiative in Davos and Paris.

Laura Sarabia, Foreign Minister, visited Japan and inaugurated Colombia’s pavilion at the Expo 2025 Osaka, where Procolombia expect around 28 million visitors. Officials argued that the venue will help showcase Colombia’s global potential, but opposition voices remain unconvinced about the actual benefits.

In response to the complaints, President Petro defended the investment, also via X, pointing out that Colombia was the only Latin American country to participate in the event and that “the money invested in the stand can be regained in only one day through exports and tourism.”

Headline photo: The design, construction, and operation of Colombia’s pavilion at Expo 2025 Osaka cost more than $11 million USD (Photo from Colombia Expo 2025 Osaka official Twitter account @Colombiaexpo)

The consortium, which is made up of the China Harbor Engineering Company Limited (CHEC) and Xi’an Metro Company Limited, is reported to be in compliance with 95% of the studies and designs needed for the project but missed the deadline largely due to incomplete document translations from Chinese, English, and French to Spanish. The group is also reportedly completing final documentation and technical adjustments to the project.

López and Leonidas Narváez, the manager of the Bogotá Metro Company, previously extended the deadline to May 5 after the consortium failed to deliver the studies and designs by the original March 30 deadline, warning the consortium that it will receive a daily fine of 50 monthly minimum wages, a standard multiplier used in Colombia when levying financial penalties.

“If, on May 5, the Metro Linea 1 consortium fails to comply again, we will initiate a sanction and fine process for noncompliance,” said Narváez when the city initially extended the deadline. “Every day that it is late in delivering the final studies and designs…the consortium will be subject to a daily fine of 50 minimum wages as of May 6.”

A construction site for the Bogota Metro on Calle 72 and Avenida Caracas. (Photo credit: Jared Wade, January 2023)

In the lead-up to the submission deadline, Luis Fernando Mejía, deputy director of the infrastructure sector, said during an interview with Blu Radio that the comptroller’s office believed that the consortium would be unable to meet the deadline.

Despite the expectation of another missed deadline and the resultant fines, López has been optimistic about the consortium’s ability to deliver the designs by June and said that the difference of a few weeks is unlikely to create delays for the project as a whole.

“[They] are doing well,” said López. “They always told us: ‘In all certainty, in June we are finished.’ They are making a big effort to finish in May. [These] are studies and designs of things that are going to start in two or three years, so that this does not delay the execution.”

López and Narváez have also stated that the construction of Metro Line 1 has been progressing steadily, with a general advance of 8.9% and a 20% completion overall, which includes the land purchase and the work on the workshop yard.

Given that the Santos administration will only be in power until after next May’s new presidential elections, there is much work to be done immediately. So Mejía hit the ground running in his first month and is staying very, very busy from both his Bogotá office and during trips around the country.

On top of the department’s role in planning infrastructure and the nation’s enormous 4G highway and road construction project — and the complications that the region-wide Odebrecht scandal present on that front — Mejía is leading DNP’s regulation overhaul.

Red tape in the country has grown unwieldy over the past two decades. So to cut through the brush, and in line with protocol guiding Colombia’s ambition to join the OECD, the department is evaluating key regulations to decide which can be abandoned due to ineffectiveness or onerous burdens placed on the private sector.

Trade logistics, particularly in terms of speeding up the time for goods through Colombia’s ports, are another high priority. Even compared to other Pacific Alliance countries — Mexico, Peru, and Chile — import and export times can take twice as long in Colombia.

To learn more about these and the DNP’s other objectives, Finance Colombia recently sat with Luis Fernando Mejia. He offered a candid view at the nation’s competitiveness challenges, the cloud of corruption that Odebrecht has created, and the future of regulations in Colombia.

Jared Wade: I know you have been in the agency for some time, but you just recently took over as the head. So to start, can you just explain a little bit about how the overall National Planning Department plan is progressing and what it is that you’re going to be focusing on for the next year?

Luis Fernando Mejía: So let me give you the overall vision of what we’re doing in here at DNP. We’re working on a series of strategies focused on increasing productivity — not only viewed as productivity from the private sector but from the public sector. How to more efficiently execute the budget, especially the investment budget, which is the one we’re in charge of.

Let me mention a few initiatives that are geared towards that main objective of increasing productivity. So first, for example, we have been working on regulation. Regulation impacts competitiveness in a very important way. We did a sweep of the regulations for the past 17 years, and we found that there were about 95,000 regulations issued by the national government.

Jared Wade: That’s 95,000 over 17 years?

Luis Fernando Mejía: Yes, 17 years. That’s about 15 regulations per day. Almost three decrees per day, which are the ones that are signed by the president.

So, that tells you that there is probably a problem of an “inflation in regulation.” And given the huge amount of regulation, there’s probably a question about the quality of the regulation.

“There is probably a problem of an ‘inflation in regulation.’ And given the huge amount of regulation, there’s probably a question about the quality of the regulation.” – Luis Fernando Mejía

So from the point of view of the private sector, having such a high number of regulations that have been issued is going to create a problem in terms of competitiveness. And in the process of ascension to the OECD, we are trying to implement something called a “regulatory impact assessment.”

This means not only looking from the legal point of view in terms of regulation — making sure that the things that we’re issuing are not unconstitutional or against another law — but also making sure that the economic point of view of the regulation is there. We need to make sure that the cost that is imposed upon the private sector is having a benefit.

Jared Wade: So this means looking at something that might have made sense in 1974 — but now there’s no reason for it to still be on the books?

Luis Fernando Mejía: Exactly. So we’re going to implement that starting next year. And in the process of that implementation we’re working with some committees — for example the energy and the water and sanitation commissions — and trying to think about how to implement this. Because, though it sounds very nice in theory, of course the devil is in the details.

So we have been working very closely with the commissions and with some of the ministries. We expect to have, in probably two or three months, the guidelines of how to implement our regulatory impact assessment in Colombia.

We had a white paper in 2014 that said that, by 2018, we have to implement this at the executive level, meaning ministries and commissions — and we’re going to be there. I think it’s very important in terms of increasing productivity.

Jared Wade: Right. I know this is something that the private sector talks about here — and everywhere. It’s something lots of people are talking about in Washington, too. They say this everyday there, right? But logistically, if there is a regulation on the books, how does it actually get repealed? Can the ministries do it or do you have to go to Congress? What’s the process?

Luis Fernando Mejía: It depends. So we’re not thinking about laws, which are Congress-mandated. We’re thinking about regulations, which are typically issued by either the president or by the ministries. It depends on the level. Decrees are signed by the president. Some resolutions, including technical resolutions, for example, are signed by the ministries. So it depends on who issued the regulations.

But what we’re going to do is not only think about the flow of the regulation, which is introducing the regulatory impact assessment, but also using the stock approach, meaning probably using a pareto of the most important regulations issued and thinking about their economic impact.

Luis Fernando Mejia, a 38-year-old who Colombia’s president called a “brilliant economist,” now has his hands full leading one of the government’s most complex departments through a regulation assessment. (Photo credit: Departamento Nacional de Planeación)

Jared Wade: What other areas are you looking at in terms of increasing productivity?

Luis Fernando Mejía: The other thing is that we launched a mission around one year ago about logistics. Logistics is a very “horizontal” issue where a lot of ministries are involved, including the Ministry of Trade, the Ministry of Finance, DIAN, and the police. The police have to control the ports and airports, for example.

“We have complaints from the private sector. For example, DIAN makes an inspection of a container and then the ICA and then the INVIMA. But there’s no coordination, so this is a lot of time wasted in customs.” – Luis Fernando Mejía

There are a lot of institutions involved, but there is not a very coordinated approach. For example, when it comes to risk assessment: What type of merchandise or container are you going to be inspecting? Each institution is thinking about their problem and thinking about how to approach the risk assessment in their own ways.

You have to change the way that the process is being done and thinking in a centralized way — risk assessment in an integral way — to make sure that all the parts involved in the chain are working together. Because we have complaints from the private sector. For example, DIAN makes an inspection of a container and then the ICA and then the INVIMA. But there’s no coordination, so this is a lot of time wasted in customs.

Jared Wade: Is that something that has just kind of developed over time as these agencies have been tasked with new responsibilities? They get tangled over time?

Luis Fernando Mejía: Yes, exactly. It’s just a problem of coordinating and mainly because those institutions are not linked to a particular sector. One of those is in the Ministry of Trade, another is in the Ministry of Finance, and another in the Ministry of Transport.

So, here at DNP, given that we have relationships with all of them, we are in charge of coordinating this mission to have some specific recommendations and guidelines about how to improve the process of logistics. And this is not only thinking about the ports and airports, but also thinking about transportation — all of the logistics chain from the exit point of the manufacturing plant to the port or the airport or wherever the merchandise is sold.

“The estimated time for handling either imports or exports throughout the Pacific Alliance is about three days. In Colombia, that’s almost six days — so double our peers.” – Luis Fernando Mejía

We think that that is going to improve competitiveness a lot. Just to give you a figure, the estimated time for handling either imports or exports throughout the Pacific Alliance is about three days. That’s what it takes for the merchandise to go through the ports. In Colombia, that’s almost six days — so double our peers. I’m not thinking about the U.S. or the European Union. We’re thinking about our peers.

We know we have to make sure that we’re in line with our peers. That’s what I think we’re going to help: making sure that that process is a lot smoother.

Jared Wade: The efficiency of moving goods and transportation is always highlighted negatively when you read reports from the World Economic Forum or the International Monetary Fund. Obviously, in terms of the road infrastructure in Colombia, it is just a difficult country to get around. I think that’s one thing that people do miss when they look from Washington or Brussels. There are 20,000-foot mountains here that make moving around problematic. But the 4G road construction plan is aiming to make improvements. Where are we in that undertaking and how is everything progressing?

Luis Fernando Mejía: Yes, at DNP we’re very involved in some of the steps before the approval of these initiatives. In the 4G, as you probably know, there are three waves with probably around nine initiatives per wave. There are close to 30 initiatives in all, and a little bit more when you include the private initiatives.

I think the first wave has already moved forward in a very important way. It’s not only about making sure that we have the construction sites finalized but also the financing side, which is key for the projects to get started.

“We are making sure that the Odebrecht stuff doesn’t add a lot of noise to the financial closure of the second and third waves [of 4G]. We’re working very closely with the banks and with the investors to leave a message of tranquility.” – Luis Fernando Mejía

We are making sure that the Odebrecht stuff doesn’t add a lot of noise to the financial closure of the second and third waves. We’re working very closely with the banks and with the investors to leave a message of tranquility. There are not going to be any issues at all. Everyone is going to get paid.

The Odebrecht stuff actually was not involved in any of the auctions for 4G. They tried to get some of the auctions but they didn’t win anything. So we’re making sure that the second wave and the third wave have financial closure.

The first wave already had financial closure. The works have already started. We estimate that the three waves are going to each add around a half percentage point of additional growth. So these are very important investments.

Jared Wade: Each adding a half point to annual GDP? So 1.5% by the end?

Luis Fernando Mejía: Exactly, 1.5% by the end. And mainly we’re going to have two impacts. The direct impact — which is the brute force construction that is going add a half point of additional growth.

But we’re also going to have the more long-term, or medium-term, impact of increased competitiveness. This means reduced times of transportation for the container or the merchandise. That’s going to be very important and, I think, that will have an important impact in terms of our rankings in competitiveness from the World Economic Forum and so forth.

Jared Wade: So there will be a short-term boom — at a time when Colombia could use it, with the price of oil being down and things being a little rockier here — and then really we’re looking way ahead to 2030 and 2040 as when the country will still continue to reap more and more benefits of a virtuous cycle?  

Luis Fernando Mejía: Exactly. Exactly. And let me comment again now on the importance of the logistics mission. Because when you think about the 4G, of course this is very important. But the time saved, for example, for a container that goes from Bogotá to Buenaventura or to Cartagena, is about eight to 10 hours. Which is a lot. It’s a lot in terms of gas saved, in times of time saved.

But think again about the number I gave you before of additional time it takes for imports and exports. We’re talking about two or three days of additional time compared to our peers. So the marginal gains of generating more efficiency in the customs process I think are very, very important to close all these 4G and customs processes.

Jared Wade: Right. I mean, you can get from Bogotá to Buenaventura in one day or three days — but if it sits in port for four days, what’s the gain?

Luis Fernando Mejía: Exactly. That’s why we think the logistics mission is very important.

Jared Wade: Getting back to Odebrecht, is that still holding a cloud over some of this stuff, with 4G and just some of the general planning and the concept of corruption and the budget in general? How much is that really impacting you on the ground here?

Luis Fernando Mejía: So let me be very concrete on this. The issue here is more about how the investors and the financiers are going to end up in a contract that is cancelled because of the corruption scandal. So, for example, in Ruta del Sol or the Magdalena River, which still hasn’t been completely proven that there was corruption there, but there’s some cloud about that.

So, when the worker decides to undo the contract, there are some questions from private financiers and private investors about who, and when, is going to get paid. Because they were not involved in any corruption on their part. It was just Odebrecht over there and there were other good-faith financiers that were bringing some resources to give the financial closure. But they did not have anything to do with the corruption.

“The Ministry of Finance is working very closely with the banks in making sure that their process is in order and that any good-faith investor is not going to lose any money. The bad guy has to be punished but the good guys have to get their resources back.” – Luis Fernando Mejía

So once these contracts are undone, there is a question about who is going to get paid and when. And that implies some clarifications in terms of the contract and in terms of the regulation.

The Ministry of Finance is working very closely with the banks in making sure that their process is in order and that any good-faith investor is not going to lose any money. Because, again, good faith should prevail and if any contract is undone because of corruption scandals, well, the bad guy has to be punished but the good guys have to get their resources back.

We’re working on that. I think that’s the thing that’s adding noise to the process, but we’re going to have some very good news on that very soon.

Jared Wade: As far as foreign investment — the banks in New York and Europe — are you still seeing people very interested in getting involved in these kinds of projects?

Luis Fernando Mejía: Yes. Definitely. And that’s part of the job of the Financiera de Desarrollo Nacional (FDN), which is kind of the financing arm from the point of view of the government. The FDN gives some credit enhancements to make sure that, for example, some bond issuances are easier. And what the FDN is telling us is that there is still a lot of appetite from the point of view of private and foreign investors to continue to invest in these 4G projects.

“There is still a lot of appetite from the point of view of private and foreign investors to continue to invest in these 4G projects.” – Luis Fernando Mejía

I think it will actually depend on that. Let me be very frank, because the big magnitude of this 4G investment implies that there are no sufficient allocations of funds from local banks to satisfy the financing needs. So we need the foreign banks and that’s, for example, why have some provisions in dollars to cover for the exchange-rate risk. And again we still see some appetite from foreign investors.

Jared Wade: Yes, as I understand it that one of the reasons why the 4G was structured to have such a public/private-partnership focus. That was very appealing because — and this is not a Colombian thing, but any government that’s leading an infrastructure project — it gets bogged down by schedules and overruns. But when you have these large banks, they tend to be more efficient about things and they’ve done it before in various countries.

One last thing that I wanted to touch on is that obviously things are probably going to change quite a bit in 2018 with President Santos leaving office. So you’re just stepping into this office now and you have about a year. How much of a task is all this? Not everything can done before then, right? Is there an understanding that these initiatives are going to continue into the next administration, no matter which side wins?

Luis Fernando Mejía: Definitely. One of the things about DNP, which is very different from the ministries, is that we have the benefit about thinking long term. The ministries have to think about the new minister who comes in with new initiatives.

DNP has always been a very technical institution thinking about long term. One of the things, and I have to be frank with you, that I may have to do is write down and leave some drafts about the new plan for the new government. That is kinds of what the DNP does. That has always been the case.

We have to make sure the main initiatives are there for the new government plan, and I don’t think the new government is going to renege on things as important as these. These are structural things that we’re thinking about: infrastructure, logistics, plans about land-zone use. Those are things that are completely structural that I don’t think any government is going to consider removing.

Again, DNP has always been a very stable institution, thinking about the long term, and we’re very sure that the new government, whoever it is, will continue these initiatives.

Photo credit: Departamento Nacional de Planeación

During his time atop the DNP, Gaviria oversaw more than the target number of 7,000 projects, according to the office of the president. He also entered the agency with some 8,500 projects designated as troubled and cut that number down to just 500 today, per the president. “What Simón has done in these two and a half years is strengthen national planning,” said Santos in public comments.

Gaviria’s reasons for resigning were not revealed by Santos. According to Blu Radio in Colombia, Gaviria has “privately said he has no desire” to run for president in 2018 despite media speculation about that possibility. The outlet says that he may pursue an educational opportunity at Harvard University in the United States.

Photo: Luis Fernando Mejía, an economist, had been serving as deputy director of DNP and joined the agency in September 2012. (Credit: Presidencia de la República)

As for the new director, Santos, via Twitter, called Mejiá “a brilliant economist who will be able to consolidate policies for equality and close social gaps.” In his public comments, Santos also praised Gaviria for “choosing the best people” when he elevated Mejía within the DNP and said that the agency will benefit from the continuity of having its new director come from within the organization.

Gaviria, on Twitter, congratulated Mejía and wished success to the new director, who he called a “great teammate.”

Mejía, an economist trained at the University of the Andes in Bogotá and the University of Chicago in the United States, had been serving as deputy director of DNP since September 2014.

The new director has previously worked to develop macroeconomic policy in a high-level position at the Ministry of Finance and served as a researcher at both Colombia’s central bank and the regional Inter-American Development Bank (IDB).

Mejiá, born in 1978, completed an economics Ph.D. program at the prestigious University of Chicago after being selected for a fellowship under the institution’s Margaret G. Reid Memorial Fund, which the university uses “to support research by graduate students investigating aspects of consumption and expenditures of consumer units that are stratified by size and composition and differ in areas of residence and of time.”

He has also been has been professor of macroeconomics and international finance at University of Chicago as well as both University of the Andes and Javeriana University in Bogotá.