By Nelson Bocanegra, Carlos Vargas and Andrea Shalal
BOGOTA, Sept 28 (Reuters) - Colombia has held talks with the International Monetary Fund in recent weeks, including discussions on possible financing, as the government races to contain a deepening fiscal crisis that has rattled investors, three sources with knowledge of the matter said on Monday.
One focus of the previously unreported discussions was whether Colombia could secure funding on better terms as it confronts soaring borrowing needs and widening deficits, said the sources, who requested anonymity as the discussions are private.
President Abelardo De La Espriella, who took office in August, said on Sunday he had ordered his economic team to open talks with the IMF to seek a negotiated solution to the crisis, acknowledging the severity of the strain on state finances, but did not say that the discussions had begun.
After Reuters reported the talks, Colombia’s Finance Ministry confirmed it had asked the IMF to send a technical mission to the country, following meetings in Bogota between IMF Deputy Managing Director Nigel Clarke and Colombian officials.
The ministry said the consultation would allow the fund to review the government’s fiscal plan and economic outlook and would be a first step toward deeper cooperation.
Later on Monday, the IMF confirmed Clarke’s visit and said the IMF backed a “homegrown reform program” for Colombia, and that a Finance Ministry delegation would travel to Washington next week for further talks.
The IMF did not announce any financing arrangement. A separate source familiar with the matter said it remained too early to discuss the size of any possible program and that any formal negotiation would require a dedicated IMF staff mission and further talks with the authorities.
Colombia is struggling amid lower tax revenue, expanded spending under the previous leftist government and persistent inflation. Those fiscal concerns have complicated efforts to contain borrowing costs and stabilize public debt, and De La Espriella has promised sweeping austerity measures to cut spending.
The government now expects Colombia’s budget shortfall to be much larger than previously forecast this year and to widen even further in 2027.
It will also increase borrowing by more than $10.5 billion this year. In 2027, borrowing is set to reach $71.7 billion, more than double what was initially planned.
(Reporting by Nelson Bocanegra and Carlos Vargas in Bogota and Andrea Shalal in Washington; Writing by Kylie Madry; Editing by Edwina Gibbs)
