Colombia congressional committees from both the lower house and Senate on Tuesday approved a request from the leftist government of President Gustavo Petro to increase the debt ceiling to $17.6 billion to finance development plans and comply with payment terms.
The votes came amid warnings from analysts about the state of the Andean country's fiscal needs and after Petro said last month that Colombia could stop paying its debts or enter an economic emergency if the ceiling was not increased, comments later softened by Finance Minister Ricardo Bonilla.
A collapse in tax collection has set off alarm bells for the market, which says the government will need to contend with an estimated budget shortfall of some 27 trillion pesos, about $7 billion, this year.
An independent oversight committee has already warned Colombia will not comply with its fiscal rule this year.
Bonilla told lawmakers during hearings on the debt ceiling request that the country's current ceiling would have meant a deficit of $1.37 billion for 2024.
The request, approved with 28 votes in favor and one against in the lower house committee and 11 in favor and one against in the Senate committee, will go to the plenaries of both houses next week.
Petro has promised ambitious reforms to labor laws, healthcare and pensions, in an effort to right what he says are centuries of entrenched inequality.
The government's four-year development plan, approved last May, aims to cut the percentage of the population living in extreme poverty to single digits, use financial surpluses from coal and oil to secure a transition to clean energy, and hand over millions of hectares of land to poor farmers. It has a cost of some $298 billion.
The finance ministry has said the debt ceiling respects government deficit projections, which were revised upward to 5.3% of GDP at the start of the year.
The government requested the debt ceiling increase - a measure usually approved about every four years - in March.
($1 = 3,944.14 Colombian pesos)
