Central Bank of Colombia publishes board member Giraldo speech on the 9.25% policy rate hold and fiscal deficit pressures

The Central Bank of Colombia published remarks by Board member César Giraldo, delivered to the Caldas Departmental Assembly in Manizales, setting out his assessment of Colombia’s macroeconomic conditions and the trade-offs behind the Board’s decision on 31 October to keep the monetary policy rate unchanged at 9.25%. He notes the decision was taken by majority, while some members favoured a cut to support growth, and frames the fiscal deficit as a key policy constraint. Giraldo argues recent growth has been driven less by oil and coal and more by agriculture (notably coffee), manufacturing and commerce, underpinned by household consumption supported by higher disposable income rather than rising indebtedness. He cites an unemployment rate of 8.2% as the lowest in 30 years, while highlighting persistent structural challenges from informality and comparatively high unemployment. On fiscal policy, he points to a deficit of 6.1% of GDP last year and a government projection of 7.1% this year, alongside the planned use of the fiscal rule escape clause and high spending rigidity (93% described as inflexible). He also references Congress’s approval to raise the General System of Transfers from 23% to 39.5% of current revenues, conditional on a competences law that could take up to 10 years to phase in, and notes a proposed financing law reduced from COP 29 trillion to COP 19 trillion that he suggests may not succeed. The publication notes the document is academic and the views expressed do not commit the central bank or its Board.