The government of President Gustavo Petro is facing one of the most acute fiscal strains since taking office at the Casa de Nariño. In recent hours, following the Constitutional Court’s decision to provisionally suspend the decree declaring an economic and social emergency, the Executive confirmed it will cut 16 trillion pesos (approximately US$4.4 billion) from the national budget for 2026.
The announcement came amid growing concern over meeting fiscal targets and the sustainability of public spending, after the court halted the extraordinary powers the government had invoked to maneuver around Congress and secure additional resources.
The suspension of the economic emergency decree—a measure intended to fill a budget gap of more than 16 trillion pesos after the rejection of a tax reform in the legislature—left the Executive without the tool it had hoped to use to raise up to 11 trillion pesos (approximately US$3 billion) through extraordinary taxes. The Court, by a majority vote, ordered the decree’s application halted while it reviews its constitutionality on the merits, a decision that has generated political and economic uncertainty.
Colombia to impose significant budget cuts following suspension of economic emergency
In a post on the social network X, President Petro explained that the government will implement an additional cut of 16 trillion pesos (approximately US$4.4 billion) in the 2026 budget as a direct response to the suspension of the economic emergency.
According to the president, this adjustment adds to previous cuts of 12 trillion and another 16 trillion pesos, bringing the total fiscal adjustments under his administration to at least 44 trillion pesos (approximately US$12 billion). The president also devoted part of his message to questioning his former finance minister, José Antonio Ocampo, and to attributing the fiscal situation to political and judicial decisions that, in his view, have harmed the management of public resources.
“We have made cuts twice: one for 12 trillion and another for 16. Another 16 will come. These cuts add up to 44 trillion pesos in current government spending. Of course, they could have been money for the benefit of the people, but I made a mistake in choosing Ocampo,” Petro wrote on X, adding a direct criticism of his first finance minister, Jose Antonio Ocampo (August 2022–April 2023).
Un economista debe decir la verdad.
Recortes hemos hecho dos veces: uno por 12 billones y otro por 16.
Vendrá otro por 16.
Estos recortes suman 44 billones de pesos corrientes del gobierno. Claro que pudieron ser dinero en beneficio del pueblo, pero me equivoqué en la… https://t.co/BdyOiH2lss
— Gustavo Petro (@petrogustavo) January 31, 2026
The announced adjustment has not been accompanied by a detailed plan on how the reduction will be distributed across the different budget lines. Official sources say the government is seeking to balance the need to comply with constitutional commitments on social investment and state operations, while also responding to the constraints arising from the judicial decision.
Analysts consulted by Colombian national media say that pressure to contain the public deficit is forcing a rethink of priorities and the postponement or cancellation of projects that had been planned for the next fiscal year.
The economic emergency and its impact
In late December, the government declared a state of economic emergency with the aim of closing the fiscal gap generated by the rejection of a tax reform in Congress. The reform sought to raise around 16.3 trillion pesos (approximately US$4.47 billion), but after failing to secure sufficient support, the executive branch resorted to the emergency mechanism to create new taxes and modify tax benefits by decree.
The Constitutional Court opened the door to the provisional suspension of that decree—while it issues a final decision on the legality or unconstitutionality of the measure—an unusual step that has recalibrated relations among the branches of government and raised questions about the limits of judicial oversight over the executive’s fiscal decisions.
So far, the judicial decision operates only as a precautionary measure, but its potential to seriously affect public finances has prompted mixed reactions among economists, politicians, and private-sector actors.
The suspension of the decree has reignited the debate over the executive’s budgetary autonomy vis-à-vis the legislature and the Court’s jurisdiction in the economic sphere. Opposition sectors and business groups from various industries had warned since January that the emergency could be unconstitutional, arguing that the executive exceeded its authority by legislating on taxes without going through Congress. By applying a provisional suspension, the Court appeared to give weight to those concerns, although it has not yet issued a definitive ruling.
From the government’s perspective, however, officials have said the judicial decision adds pressure to an already strained fiscal context, with a budget deficit that requires urgent adjustments. President Petro has said that judicial measures and the decisions of those who oppose his administration have contributed to the need to cut budget lines that, absent these constraints, would have been allocated to social programs and public services.
Public finance experts have said that the challenge for the administration will be to balance fiscal credibility with the need to maintain a functional state apparatus and meet public expectations regarding social spending.