COLOMBIA

Colombia is a Social State of Law, organized in the form of a unitary, presidential republic with autonomy of its territorial entities, as stated in the Colombian National Constitution of 1991. The president of Colombia is the head of the government and the head of the state, elected by popular vote for four-year mandates. Colombia has a bicameral congress: the upper chamber, the Senate, has 108 members from which 100 members are elected by the entire country and the remaining eight are special constituencies, which represent indigenous and Afro groups and other minorities. The lower chamber, the House of Representatives, comprises 172 representatives from which 161 are elected in the departments and the Capital district of Bogota, proportional to the number of inhabitants, and the remaining 11 are from special circumscriptions. Territorial constituencies are formed by all departments and the capital district of Bogotá and the number of seats in the lower chamber are proportional to the number of inhabitants per department. Last congress elections were held in March 2022.

Colombia has a two-tier subnational government structure enshrined in the 1991 Constitution, composed of departments (regional level) and municipalities and districts (local level). At both departmental, municipal and district levels of governments, the executive power is vested in the hands of governors and mayors, elected for single four-year terms by popular vote. Each department also has a departmental assembly (Asamblea Departamental), with members elected by universal suffrage, one for every 40 000 inhabitants, and each municipality has a municipal council, elected using the same electoral system that is used for departmental assemblies. The Capital District of Bogota is administered by a directly elected Superior Mayor (Alcalde mayor) and a 45-member municipal council. The last local elections of Governors and Mayors were held in October 2019.

The decentralization process in Colombia started in the 1980s with the transfer of functions from the central government to municipalities and an increase in the level of transfers to subnational governments. The process also involved the election of mayors by universal suffrage and strengthening subnational government tax collection. This process was followed by a series of reforms and the election of governors by general suffrage introduced in the 1991 Constitution. The country made further progress towards decentralization in 2001 with the General Participation System, in which transfers to local governments were regulated. Despite the efforts, decentralisation slowed down between 2002 and 2010 with the reduction of transfers and budget cuts for local governments. However, a set of reforms aimed to restore decentralisation was initiated in 2010 with the National Royalties System (SGR) and the Law 1454 “Organic Law of Territorial Planning (LOOT)” in 2011, which aimed to increase the share of royalties between central and local governments and set the basis for subnational government associative schemes. Other efforts towards decentralisation include the Peace Agreement signed in 2016 which proposed a rural reform to reduce rural inequality and reverse the concentration of land ownership.

More recently, the National Development Plan (2018-2022) proposed a Decentralisation Mission, currently ongoing, that aims to review the distribution of responsibilities across all levels of government, the financial structure of subnational governments and the consolidation of indigenous communities. These missions were further emphasized in the Pact for Decentralization (Law 1962/2019) which led to the strengthening of Administrative and Planning Regions (RAP), already referred to in the Constitution. The RAP is an associative scheme to promote cooperation between departments (districts can also participate in RAP). The reform aims to articulate the nation’s development model with the local government’s agenda and to reduce existing disparities between regions. In 2022 (Law 2200), RAPs became regional entities with their own legal status, autonomy and their own assets, although they do not form an electoral constituency. RAPs are financed with resources from their constituent subnational governments, and can be co-financed by central government transfers. Currently, there are five RAPs: Central, Pacific, Caribbean, Eje Cafetero and Amazonia.

TERRITORIAL ORGANISATION
MUNICIPAL LEVEL	INTERMEDIATE LEVEL	REGIONAL LEVEL	TOTAL NUMBER OF SNGs (MUNICIPAL LEVEL) (2021)
1 102 Municipalities (Municipios) and Capital District Bogotá		32 departments (Departamentos)
Average municipal size: 46 324 inhabitants
1 103		32	1 135

OVERALL DESCRIPTION: Colombia has a two-tier local government structure, including 32 departments (departamentos), and 1 103 municipalities (municipios) at lower level, including the Capital District of Bogota. Around a third of the population is concentrated in two departments and the capital. There are still 20 areas that do not belong to any municipality. A full chapter in the constitution (title XI from article 285 to article 331) is dedicated to “territorial organisation”.

REGIONAL LEVEL: At the regional level, Colombia is made up of 32 departments. Departments in Colombia are very heterogeneous not only for the population size and area but also for their levels of development. The average size of departments is 1.546 million inhabitants.

Departments have the power to establish municipal districts and to review the acts of the municipal governments to determine their constitutionality. Bogota is subdivided into 20 localities (localidades) each with their own local administrative board of at least seven members and a local mayor appointed by the superior mayor from a list submitted by the local administrative board or JAL (Junta Administradora Local) for a four-year period. Acute disparities across regions and urban areas persist despite the significant resources Colombia invests to promote regional development, in particular regarding access to infrastructure.

The Constitution also sets the framework for the creation of administrative or planning regions that can result from the merger of several departments. The RAPs are an example of coordination between different departments with common development goals to exploit resources, generate projects and contribute to the construction of infrastructure, among others. RAPs as associative schemes were strengthened recently with the Law 1962/2019, which also gives the possibility for RAPs to become regional entities from 2022, conditioned to specific requirements.

MUNICIPAL LEVEL: Among the 1 102 municipalities, ten are categorised as special districts (distritos especiales) due to their particular political, commercial, historical, industrial, cultural or environmental characteristics, among other important factors, which allows them to enjoy certain prerogatives (according to the Law 1617/2013). In addition, the Capital District of Bogota holds a special status due to its size and importance which gives it the powers of both municipalities and departments. Bogota is the most populated city in the country, whereas the municipality of Busbanzá is the least populated, with 1 161 inhabitants in 2021. Average municipal size is 46 324 inhabitants.

Municipalities are classified into six categories and a special category based on their population and revenue base (Law 617/2000 and Decree 2106/2019). This classification serves as an administrative tool for the central government to organise differentiated policies. Currently, around 88% of municipalities are classified in the lowest category (category six), concentrating 32% of the population. Only 2% of municipalities are ranked in category one and they agglomerate almost 20% of the total population.

HORIZONTAL COOPERATION: The Colombian government provides legal basis for inter-municipal cooperation with the 2011 LOOT Law. In 2019, there were 54 cooperative structures at the municipal level that had directly followed the LOOT under the associations of municipalities scheme. In addition, Law 1625 – passed in 2013 – set up six metropolitan areas that are legislated territorial jurisdictions (Areas Metropolitanas). They have more administrative and fiscal autonomy than other urban regions and they can manage jointly some services of area-wide importance (e.g., transport). Finally, there are 12 administrative and planning provinces, which are formed by two or more geographically neighbouring municipalities of the same departments. In 2019, there were other 10 associative schemes in process of being formed.

INDIGENOUS TERRITORIES: The 1991 Constitution recognised Colombia as a multi-ethnic nation, giving indigenous territories (resguardos) special status. There are currently 966 collectively-own reserves (resguardos) in Colombia, with a population of around 1.9 million (4.4% of the national population). The land area covered by indigenous territories is nearly 30% on average, although in some departments the area covered is about 70%. Almost two thirds of the Indigenous population is concentrated in four departments. A landmark decision in the autonomy of indigenous regions was the Decree 1953/2014. It enlarged the autonomy of the indigenous territories, allowing them to manage resource allocation directly. In addition, while approximately 38% of the Colombian Amazon did not have a formally recognised local government, the Decree 632/2018 further strengthened the autonomy of indigenous peoples of Guainía, Vaupes and Amazonas, which are departments of Colombia’s Amazon region.

The 1991 Political Constitution and the Laws 60/1993 and 115/1994 delineated the distribution of subnational governments’ competences related to public service delivery, social services, and public amenities among departments and Bogota (Laws 715/2001 and 1176/2007), and the municipalities and districts (Law 136/1994). In 2011, the LOOT contributed to clarify the rules for decentralisation by providing details about the division of responsibility between the central government and territorial entities. Yet the distribution of competencies across levels of government remains complex.

There is a dual system of decentralised and delegated responsibilities, and the majority of competences are shared between all levels of government (education, health, water and sewerage, housing). The departments are responsible for planning and promoting the economic and social development of their territory. They exercise administrative functions of coordination and intermediation with the municipalities. Municipalities provide services such as electricity, urban transport, cadastre, local planning and municipal police. They are classified as being “certified” or “non-certified” for the provision of certain competences

(such as health, education, water and sanitation) also according to their population size, for which the central government determines universal coverage targets and quality standards. Only when a territorial administration reaches these targets and standards is it entitled to use the surplus resources in other areas of its own competence.

Main responsibility sectors and sub-sectors
SECTORS AND SUB-SECTORS	Regional level	Municipal level
1. General public services (administration)	Passport issuance	Civil registers; Building permits;Management of municipal property and enterprises
2. Public order and safety	Risk and disaster management
3. Economic affairs / transports	Rural development; Regional policies.Regional territorial planning; Traffic management	Promotion of social, economic and environmental development
4. Environment protection	Environmental protection	Solid waste management; Sanitation
5. Housing and community amenities	Coordination and co-financing of water schemes	Territorial planning; Local infrastructure; Water supply; Housing
6. Health	Public health; Services for the uninsured poor population. Operation of the hospital network	Public health; Administration of the subsidised scheme;Services for the uninsured poor population
7. Culture & Recreation		Sport; Culture; Leisure
8. Education	Management of teacher and administrative personnel in basic and primary education	Early primary, and secondary education; Construction and upkeep of buildings; Canteens and extra-curricular activities; Payment of salaries
9. Social Welfare

Scope of fiscal data: Municipalities and departments.

SNA 2008

Availability of fiscal data: Medium

Quality/reliability of fiscal data: Medium

GENERAL INTRODUCTION: The 1991 Political Constitution and the Laws 60/1993 and No. 115/1994 set the framework for fiscal decentralisation in the country and ruled on the distribution of resources among departments, municipalities and districts. Regulations may be issued by Departments through ordinances (ordenanzas) and by municipalities through agreements (acuerdos).

Colombia is one of the most decentralised unitary countries in Latin America but the level of decentralisation is low compared with other OECD countries. subnational governments have significant resources and spending responsibilities, yet fiscal decentralisation is vertically imbalanced, as subnational governments have wide-ranging competences compared to limited fiscal autonomy, leaning more towards a system of devolution rather than a decentralised one. Equalisation systems were introduced in 2011 through the reform of the General System of Royalties (SGR reform, from Law 1530/2012 amended by Law 2056/2020) through a sharing system across departments, and more recently through the strengthening of the RAPs to ensure better coordination between regions and the reduction of regional disparities.

Subnational government expenditure by economic classification
2020	Dollars PPP / inhabitant	% GDP	% general government	% subnational government
Total expenditure	1 782	11.9%	32.7%	100.0%
Inc. current expenditure	1 555	10.4%	31.8%	87.3%
Compensation of employees	452	3.0%	45.6%	25.4%
Intermediate consumption	320	2.1%	40.4%	17.9%
Social expenditure	332	2.2%	21.7%	18.6%
Subsidies and current transfers	434	2.9%	41.3%	24.4%
Financial charges	16	0.1%	3.0%	0.9%
Others	0	0.0%	0.0%	0.0%
Incl. capital expenditure	227	1.5%	40.7%	12.7%
Capital transfers	20	0.1%	16.2%	1.1%
Direct investment (or GFCF)	206	1.3%	47.9%	11.6%

EXPENDITURE: Subnational government expenditure in Colombia is slightly below the average for OECD unitary countries as share of GDP (12.7% in 2020) while above the average for OECD unitary countries as share of public expenditure (27.5% in 2020). Municipalities represent around two-thirds of expenditure against one-third for departments. Current expenditures represent around 87% of subnational government total expenditure, as they include the payment of teachers and health staff, over which subnational governments have no control. Subnational government spending autonomy is limited by the fact that subnational governments have limited revenue sources. Indeed, subnational governments may be considered “spending agents” on behalf of the central government, as most expenses are earmarked to three areas: education, health and water, sanitation, and pensions.

DIRECT INVESTMENT: Subnational governments accounted for 47.9% of general government direct investment in 2020, slightly below the OECD average for unitary countries (48.9%). The role of subnational governments in public investment has increased since the decentralisation reforms. subnational governments invest, in particular, in local infrastructure projects such as schools, hospitals and local roads. Yet the infrastructure gap remains significant in Colombia, which affects access to transport infrastructure, education and housing, especially in rural communities. As previous development plans, the 2018-2022 National Development Plan (PND), and the Territorial Plans 2020-2023, enhanced the territorial approach to close these gaps with special focus on the SDGs.

Additionally, investment financed via transfers from the central government has decreased since the 2000s, whereas the royalties reform (SGR) has increased available resources to subnational governments since 2012. Since the start of the SGR, royalties have financed around 21 533 projects amounting to around COP 64.4 trillion, almost 42% of the total resources financed transport and housing projects. Caribe and Llanos regions concentrated 54% of those investments. Investment projects to be financed by the SGR system have to be approved by a collegiate body made up of central and local public authorities and experts.

In order to improve coordination of investments among different levels of government, Colombia has launched a model of “Pactos Territoriales” (PT) (formerly known as “Contratos Plan”). These contracts are defined jointly by the national government, departments and municipalities to coordinate investment programmes in specific areas. Pactos Territoriales focus on social and economic investments and institution building for subnational governments. The last PND also considered COP 849 trillion to attend investments for the PT scheme. Moreover, to accelerate the implementation of the peace agreement and victims’ reparation, the PND also considers a “pact for peace building” with an investment of about COP 10.4 billion for the most affected municipalities.

Subnational government expenditure by functional classification
	Dollars PPP / inhabitant	% GDP	% general government	% subnational government
Total expenditure by economic function	1 930	12.3%	-	100.0%
1. General public services	252	1.6%	30.5%	13.1%
2. Defence	0	0.0%	0.0%	0.0%
3. Security and public order	27	0.2%	7.8%	1.4%
4. Economic affairs/transports	268	1.7%	54.4%	13.9%
5. Environmental protection	55	0.4%	54.2%	2.9%
6. Housing and community amenities	68	0.4%	92.6%	3.5%
7. Health	458	2.9%	54.1%	23.7%
8. Recreation, culture and religion	113	0.7%	86.2%	5.9%
9. Education	467	3.0%	72.4%	24.2%
10. Social protection	222	1.4%	15.1%	11.5%

Subnational governments play a key role as public service providers, however most expenditures are earmarked by the central government. Education is the largest item, accounting for 24.2% of subnational expenditure in 2019. Subnational governments are responsible for the management of educational services of preschool, basic primary and secondary school and high schools. Departments are responsible for paying and training teachers, while municipalities are responsible for the construction and maintenance of school buildings. The second budget item is health (23.7% of SNG expenditure in 2019), for which they receive earmarked funding. Other important spending items are social protection, general public services and economic affairs and transport.

Subnational government revenue by category
2020	Dollars PPP / inhabitant	% GDP	% general government	% subnational government
Total revenue	1 905	12.7%	43.3%	100.0%
Tax revenue	545	3.6%	20.6%	28.6%
Grants and subsidies	1 147	7.7%	-	60.2%
Tariffs and fees	70	0.5%	-	3.7%
Income from assets	141	0.9%	-	7.4%
Other revenues	1	0.0%	-	0.0%

OVERALL DESCRIPTION: Subnational governments in Colombia depend heavily on intergovernmental transfers, which represented more than half of their total revenue (60%), above the OECD average for unitary countries (53.3% in 2020). Tax revenue accounted for almost 29% of subnational government total revenue. Income from assets (including oil and mining royalties) is a significant source of revenue for subnational governments, in addition to tariffs and fees (both accounting for around 11% of subnational government total revenue).

TAX REVENUE: Tax revenues represent a limited share of subnational government revenue and share of GDP, below the average for OECD unitary countries (35.4% and 4.5% in 2020 respectively), although above the average as a share in total public tax revenue (18.7%). Subnational governments have limited taxation autonomy and little room for manoeuvre over tax rates and bases. Several taxes are earmarked for specific use. Departmental tax revenues include receipts from the excise taxes (beer, tobacco, liquor, i.e. 49% of their tax revenues), vehicle tax (14%), register tax, gasoline tax and other taxes. There are around twenty different municipal taxes, but about 80% of tax receipts of municipalities come from only three of them: Industry and Commerce tax (ICA, 37% of municipal tax revenues), property tax (Predial, 37%) and a gasoline surtax (around 5%).

Since 2016, Colombia has engaged in reforms to update and modernise its cadastral and land registries in order to improve the performance of the municipal property tax. This was also emphasised in the PND 2018-2022 that aimed to increase the share of geographical area with cadastre updated from 5.6% to 60%. In 2020, which was marked by the COVID-19 health crisis, subnational governments tax revenue experienced a decline of about 9% compared to the previous year. Departments had a larger tax revenue decrease of 11.2% while municipal revenues dropped 5.8%.

GRANTS AND SUBSIDIES: The main central government transfer is the General Participation System (SGP). SGP funds are earmarked for the most part to current expenditures (labelled as “social investments” in Colombia), according to a formula based on a combination of population coverage, social equity and efficiency criteria. It benefits both departments (35% of the SGP) and municipalities (65% of the SGP). SGP links transfers with sectoral policies and aims to improve the decentralised provision of basic services throughout the country: education, health, and water supply and basic sanitation, which accounts for around 96% of the SGP, the remaining 4% is made up of “special assignments” that include resources for indigenous communities, pensions, school meals and others. Expenditure parameters have been defined for each of those three areas by the Organic Law 715/2001 on resources and competencies, modified by Law 1176/2007. Such a strict earmarking has a significant equalisation effect across jurisdictions; however, the allocation criteria has been criticised for not distinguishing between urban and rural areas, and for being too rigid. Other grants, coming from co-financing schemes and ministerial subsidies, are also earmarked, and come with conditions; for instance, the projects must fund specific investments (e.g., road or urban infrastructure).

OTHER REVENUE: Tariffs and fees accounted for 3.7% of subnational government revenue in 2020, a smaller percentage relative to the OECD average for unitary countries of 9.1%. The Constitution of 1991 defined the distribution of a property income resulting from the extraction of non-renewable resources, mainly coal and oil (royalties - collected by the central government) among departments and municipalities. Until 2011, most royalties were directly allocated to resource-rich departments, whereas only 20% were transferred to the National Royalties Fund as a redistribution tool. A radical reform was introduced by the Law 1530/2012 which was recently modified by Law 2056/2020 that granted the reallocation of all royalties to subnational governments based on poverty (measured by the Basic Needs Index) and population.

The reform of the SGR allocates a share of 20% for departments and municipalities where the exploitation and extraction of natural resources takes place. Moreover, 15% are allocated to the poorest municipalities, for which minimum 2% must be used to finance local investment in environment and sustainable development. The SGR also redirects 34% of the fund for regional investment and 10% for the science technology and innovation fund. The SGR resources were significantly affected by the sharp drop in oil prices resulting from the deceleration of economic activity during the COVID-19 pandemic. In this scenario, local finances were also hit considering subnational governments high dependence on transfers from royalties.

Subnational government fiscal rules and debt
2020	Dollars PPP / inh.	% GDP	% general government debt	% SNG debt	% SNG financial debt
Total outstanding debt	1 964	13.1%	13.0%	100.0%	-
Financial debt	384	2.6%	3.5%	19.6%	100.0%
Currency and deposits	58	-	-	3.0%	15.2%
Bonds / debt securities	51	-	-	2.6%	13.4%
Loans	274	-	-	14.0%	71.3%
Insurance pensions	1 160	-	-	59.1%	-
Other accounts payable	419	-	-	21.4%	-

FISCAL RULES: The fiscal context of the 1990s, when subnational governments recorded large cash deficits, increase in spending and debt stress, required the central government to enact a set of fiscal discipline laws to address fiscal imbalances. In addition to rules applied to borrowing (cf. below), several laws were adopted to limit growth of current expenditure and establish a budgetary classification of the municipalities based on population and current incomes (Law 617/2000). In 2003, fiscal rules were again strengthened through a proper Law on Fiscal Transparency and Responsibility (Law 819/2003), which applies both to the national and subnational governments, setting a budget balance rule and budget targets linked to debt and deficit ceilings at subnational levels. Municipalities also have limits on their operating costs (Law 617/2000, modified by Law 1551/2012), which defined seven categories of municipalities and five categories of departments to determine appropriate ceilings for current expenditures, according to demographic size and current own revenues. More financially autonomous subnational governments (or those in the special category) have stricter current expenditures ceiling than smaller ones.

DEBT: subnational government borrowing is regulated by strict prudential rules, in particular the 1997 Traffic Light Law that classified subnational governments according to liquidity and solvency indicators. In 2003, the Law 819/2003 tightened borrowing restrictions. This required departments and large municipalities to obtain satisfactory credit ratings from international rating agencies before being able to borrow on the market. subnational governments are allowed to take on debt if it is meant to finance capital expenditure (“golden rule”). Some of the restrictions were relaxed because of the financial distress brought by the Covid-19 pandemic. The central government introduced new mechanisms through which subnational governments could access to borrowing, which was compiled in the Decree 678/2020.

subnational government debt is below the OECD average for unitary countries (14.5% as shared of GDP) but above regarding its share in public debt in 2020 (10.5%). A large share of subnational government debt is concentrated in insurance pensions (59.1%), whereas the financial debt and “other accounts payable” accounted for respectively 19.6% and 21.4% of total subnational government outstanding debt. Within financial debt, loans accounted for almost 71% of the debt stock while bonds and deposits represented the remaining share (29%).

TERRITORIAL MANAGEMENT OF THE CRISIS: Colombia declared a state of emergency on 17 March 2020 (Decree 417/2020). Despite most mitigation measures being directed by the central government, the role of subnational governments on the provision of social services was also crucial. Regional disparities in the health sector were also pronounced during the pandemic, which posed challenges in regions like Vaupes where the number of hospital beds per inhabitant remained low (less than 2 per 1 000 inhabitants in 2018). Moreover, most regions in Colombia also lacked medical equipment and the number of hospital beds (less than 2 in most regions) and doctors per inhabitant (2 to 3 per 1 000 inhabitants vs OECD average 2.6 in 2019) remained low.

EMERGENCY MEASURES TO COPE WITH THE CRISIS AT THE DIFFERENT LEVELS OF GOVERNMENT: Different measures were taken to respond to the economic crisis created by the Covid-19 pandemic. In terms of management of subnational government debt, the central government issued Decree 678/2020 with the objective, among others, of providing local administrations with a greater margin of financial manoeuvring via public debt. This legal framework allowed subnational governments to access to special treasury credits corresponding to 15% of current income payable until the following term in which they were contracted and credits for economic reactivation. The credits for economic reactivation also contemplated an increase in the debt sustainability indicator, a neutralisation of the calculation of solvency and the possibility of internal debt operations that exceed 100% of the sustainability indicator. Other mechanisms to counteract the effects of the pandemic included the reorientation of earmarked resources to address the most urgent expenses (this includes operating expenses and financial surpluses) as well as allowing local authorities to introduce tax relief measures to cushion the immediate impact of the sudden drop in economic activity on businesses and households. During the crisis, governors and mayors were also allowed to carry out modifications in their budgets to attend the emergency. Finally, the transfer of 100% of the surcharge to the diesel, fuel or oil for motors (ACPM in Spanish) to the capital district Bogotá and all departments was authorised (compared with only 50% before the pandemic).

Some measures to alleviate economic hardship for the most vulnerable families were introduced in Bogotá. The programme was called “Bogota Solidaria en Casa”, and it consisted in an unconditional cash transfer and food transfers to households in need. More than 500 families benefited from the programme in 2021.

IMPACTS OF THE CRISIS ON SUBNATIONAL GOVERNMENT FINANCE: The economic and social crisis caused by the Covid-19 pandemic brought great pressure on subnational government public finance in Colombia. During 2020, subnational governments tax revenue experienced a decline of about 9% compared to the previous year, from which municipal tax revenue experienced a fall of 5.8% while departments reduced their revenues by about 11.2% respectively to the previous year. While local governments experienced a decline in their revenues, their role in the delivery of services increased, especially regarding public health care, social assistance, and economic reactivation. The slowdown of economic activities and restrictions on mobility also led to low levels of tax revenue, the most pronounced reductions occurred in industry and commerce tax, stamps and surcharge on gasoline. In contrast, subnational government expenditure experienced a decline of around 10% compared to the previous year, this change was mainly driven by an important reduction in direct investment (about 33%).

Regarding total debt levels in 2020, subnational governments debt recorded a rise of about 6% compared to the previous year. This change was mainly driven by a significant increase in bonds (37% respect to 2019). In 2020, municipalities accounted for the largest share of the debt (65%) while departments accounted for the remaining 35%. Bogota remained as the most indebted department with a share of 24% of the total debt. It was followed by Medellin, Antioquia, and Barranquilla that jointly accounted for almost 35% of the total debt.

In the context of the state of emergency (Decree 417/2020), the Emergency Mitigation Fund (or “FOME” in Spanish) was created. FOME was financed with resources from the royalties’ savings fund (COP 12 billion), also called “Fondo de ahorro y estabilización” (FAE). This meant that accumulated resources in this fund to mitigate the effects of fluctuation in prices of non-renewable natural resources were available to attend the health and economic emergency. Other subnational government financial resources such as those from the Territorial pensions fund “FONPET” were also allocated to finance the FOME (COP 3 billion). Although FOME is financed with resources from local governments, the management of the fund is entirely administered by the central government.

ECONOMIC AND SOCIAL STIMULUS PLANS: In 2020, the national government approved a reactivation economic plan to mitigate the effects of the Covid-19 economic crisis for the period 2021-2026. The strategy has a budget of around USD 38 000 million, which is around 12.5% of the GDP. The strategy aims to create 2 million jobs, strengthen support for households and businesses, incentivise economic growth especially in the transport and mining sectors and guarantee Covid-19 vaccination for 35 million Colombians. It is also expected to foster economic growth translated in two GDP percentage points.

In September 2021, a fiscal reform called “Social Investment Law” was approved by the Congress (Law 2155). It was passed during a crucial period of economic distress caused by the Covid-19 health crisis. The reform focuses on economic recovery and increasing public revenues needed to finance social programmes. The reform introduced some programmes to reactivate the economy such as: Solidarity Income Programme, Formal Employment Support Programme, incentives for the creation of new jobs, elimination of fees in higher education and transport. Other initiatives a normalisation tax at national level, days without VAT (three days a year) and an automatic VAT refund mechanism.