The election of Gustavo Petro produced an early-cycle market panic, followed by a multi-quarter reassessment in which institutional checks — Banrep independence, Congressional resistance to radical reform, judicial review — appeared to constrain the executive. The market priced a benign Petro scenario. The macro path now visible is closer to the original concerns than to the reassurance. Fiscal slippage is real, oil and gas investment has slowed under regulatory uncertainty, and the medium-term GDP and credit-rating trajectories are worse than the consensus assumed.
Key takeaways
- The 2026 fiscal deficit will be wider than fiscal-rule target.
- Hydrocarbon investment has fallen materially.
- Petro-era tax reforms have under-yielded vs projection.
- Credit rating trajectory is now under pressure.
What is happening underneath
Three structural problems. The fiscal rule's flexibility has been exploited to widen the deficit. New oil and gas exploration licenses have been suspended, producing a multi-year supply problem. And tax reform yield has consistently come in below MoF projections.
- Fiscal rule. Flexed but not formally broken.
- Hydrocarbons. Investment is structurally lower.
- Tax yield. Below projections, repeatedly.
What it means for assets
Colombian sovereign spreads are wider than peers; the COP has weakened materially; equity multiples have compressed. The reassessment is partially priced but not fully.
What could improve it
A political transition in 2026 producing more orthodox economic management.
Where Ecopetrol sits
Strategic capex is being deferred; the equity is under structural pressure.
Macro indicators
| Indicator | 2022 | 2026 |
|---|---|---|
| Fiscal deficit % GDP | -5.5% | -5.8% |
| Hydrocarbon capex ($bn) | ~5.0 | ~3.2 |
| Sovereign rating | BB+ | BB |
The market priced the institutional check on Petro. The macro path shows the check was real but incomplete.
Frequently asked questions
Is rating downgrade certain?
Likely without a fiscal correction.
What about the COP?
Weaker bias persists.
Does the political cycle help?
Conditional on the 2026 outcome, yes.
The bottom line
Colombia is the underrated emerging-market underperformer. The market has not fully repriced.
