Colombia's First Leftist Government Cuts Poverty but Leaves Debt Burden

Bogota, Colombia: Laura Espinel was able to pursue her dream of becoming an artist thanks to the "zero tuition" program launched by President Gustavo Petro's administration in 2023. The program covers up to 100% of tuition fees at public universities, primarily for youth from middle- and low-income families. Official figures show 870,000 students at 64 public institutions have benefited.

"Without zero tuition, I might not have been able to study, because when I started, my finances were quite precarious. I didn't have enough money to pay for a semester, even at a public university," Espinel said. Without the waiver, Laura would have to pay about $400 a year; at a private university, at least $3,000.

The "zero tuition" program is one of many social policies pushed by Colombia's first left-wing government, which is now winding down after four years.

On May 31, Colombia will elect a new president. The two main candidates are political opposites. Ivan Cepeda, a veteran left-wing senator from Petro's party, wants to continue Petro's social and economic policies, including a shift to renewable energy and investment in rural areas and small farmers, aiming for an agricultural economy rather than resource extraction.

His opponent is Abelardo de la Espriella, a far-right lawyer who wants to cut government spending and reduce taxes for large corporations. He also proposes building mega-prisons similar to the security policy of El Salvador's President Nayib Bukele.

Both candidates face a major challenge: net debt equivalent to 58.5% of GDP, coupled with high interest rates limiting government spending.

Social Progress

President Petro spent much of his term pushing ambitious proposals: peace talks with illegal armed groups, pension reform, and financial legislation to tax the rich. However, many proposals failed to pass Congress. The most notable achievement was a labor reform passed in June 2025, raising the minimum wage by 23%, far above the usual 5% to 10% increases. The law also mandates higher overtime pay starting at 7 p.m., two hours earlier than before.

Colombia's unemployment rate fell to 10.9% in January 2026, the lowest in 25 years. However, some economists say the drop is partly due to a rise in informal jobs and an expansion of the public bureaucracy, from 48,000 employees in 2022 to 64,000 in 2024. Six out of ten new jobs in early 2026 were informal, mainly in retail, agriculture, construction, and transportation. Mauricio Salazar, an economist at Javeriana University, says the downward trend in unemployment is part of a post-pandemic recovery wave across Latin America.

Debt Dependency

Social measures led to higher public spending. To fund his proposals, Petro sought to raise 26 trillion pesos ($2.5 billion) through various plans, including higher taxes on the rich, but all were rejected by Congress.

"This administration increased debt by 400 trillion pesos ($109 billion)," Salazar said. "The question is, beyond focusing on equity, what was their economic development and investment attraction strategy? The data shows it didn't work. The government had to rely on borrowing."

Some economists say the rising debt burden is partly due to the pandemic, as governments worldwide increased social spending. Others criticize Congress for failing to pass a value-added tax (VAT) on liquid petroleum fuels, online gambling, and church-related businesses.

Simon Gomez, an economist at King's College London who supports Petro's policies, argues: "Petro sought to promote an economic model where recovering workers' income share shows that an unequal economy is less prosperous. Colombian society is calling for more spending, but the elite, especially in oil and mining, effectively blocked the promise of tax justice in Congress."

Petro's policies include promoting energy transition, halting new contracts for coal, oil, and gas exploration, and distributing land to small farmers. However, hydrocarbons account for more than 40% of Colombia's total exports and are hard to replace. Right-wing candidate de la Espriella says he will allow activities such as fracking if elected, while Cepeda focuses on non-traditional renewables like solar and wind.

Retaliatory Tariffs

Since January, Ecuador unilaterally imposed a 30% tariff on imports from Colombia, citing security concerns. Ecuadorian President Daniel Noboa said Petro did not cooperate on security along the 586 km border. The tariff later rose to 100%. Colombia retaliated with a similar tariff.

An estimated 5,000 jobs have been lost in the border region since February, with at least 2,700 companies in Colombia and 2,000 in Ecuador affected. In early May, the Andean Community (CAN) intervened, declaring the measures illegal. Ecuador refused to comply.

This diplomatic spat is eroding investor confidence in Colombia, which had already weakened due to rising violence.