Colombia declares an economic emergency in a criticized effort to raise more taxes

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BOGOTA, Colombia (AP) — Colombia ’s government has declared an economic state of emergency that enables President Gustavo Petro's administration to issue taxes by decree, as the nation struggles to finance hospitals and the military while paying off record debts.

Petro issued the decree late Monday. His leftist government recently failed to get congressional approval for a tax bill that would have boosted the government’s budget by $4 billion in 2026, a year featuring presidential and congressional elections.

Public spending under Petro, elected in 2022, has ballooned to levels that exceed spending during the pandemic. Colombia’s national government has a budget of approximately $134 billion in 2025.

The decree says the government needs more funds to pay fuel subsidies, cover health insurance payments and invest around $700 million in infrastructure that will enable the military to counter drone attacks from rebel groups.

The government has yet to publish a law that spells out the taxes it wants to impose under the emergency. Leaked documents reported by local media last week show that the government plans to impose new wealth taxes on businesses and individuals and place a steep sales tax on alcohol, including rum and wine.

Business associations have been highly critical of the decree, which they have described as authoritarian and designed to circumvent congressional oversight.

Bruce Mac Master, president of Colombia’s National Association of Industrialists, asserted on social media that the decree was a “flagrant abuse of the rule of law.”

Many analysts expect the Constitutional Court to overturn the decree. Under Colombian law, a state of economic emergency can be declared only when there is a grave, imminent and unexpected threat to the nation’s economic order.

Jorge Restrepo, an economics professor at Bogota's Javeriana University, said it will be difficult for the government to convince Colombia's highest court that its decree meets legal requirements.

“This was not an unexpected situation ... like a war or natural disaster," he said of the current budget deficit. “We knew there was a fiscal crisis brewing since the middle of last year.”