The International Monetary Fund has suspended Colombia's access to its Flexible Credit Line (FCL), worth approximately $8.1bn and in place since 2009, citing concerns over the country's fiscal management.

The multilateral organisation indicated that "from April 26 2025, Colombia's continued qualification for the FCL is contingent upon completing the ongoing Article IV consultation and a subsequent mid-term review," according to a statement from Julie Kozack, the IMF's director of communications.

The move, which triggered a sharp drop in national bonds and led President Gustavo Petro to describe the fund as "vampires," comes as Colombia faces growing economic challenges, with the IMF recently downgrading its 2025 growth forecast from 2.5% to 2.4%.

The Colombian Ministry of Finance quickly responded to the announcement, clarifying that the Article IV consultation process "continues in progress" and emphasising that the country is advancing in its economic adjustment following the pandemic. The ministry pointed to signs of recovery, including an estimated economic growth of 2.6% for 2025 and international reserves reaching $63.4bn by the end of March.

Financial experts warn the suspension could have significant consequences for the Colombian economy. José Ignacio López, president of the National Association of Financial Institutions (ANIF), told El Tiempo the effect "will be most clearly seen on the Colombian peso" as the FCL is understood as a contingent international reserve.

"The government still has room for manoeuvre, albeit limited, to send a message of fiscal adjustment that allows for the closure of Article IV and keeps the flexible credit line open until April 2026," López added.

Colombia has maintained continuous access to the credit line since its creation in 2009 but has only used it once, during the Covid-19 pandemic in September 2020, when it withdrew approximately $5.4bn to address the emergency.

The IMF's concerns stem primarily from Colombia's fiscal situation. The Washington-based lender noted that the central government deficit increased to 6.7% of GDP in 2024, above official targets, contributing to raising public debt to 61.3% of GDP.

Luis Fernando Mejía, executive director of Fedesarrollo, a Colombian economic think tank, stated the IMF's decision reflects the gravity of the country's fiscal situation, noting that 2024's deficit was the third highest in 120 years.

In a similar vein, former finance minister Mauricio Cárdenas described the suspension as "the worst message for financial markets," stating that Colombia has lost its "spare tyre just when the global economy is full of uncertainties."

The Flexible Credit Line is a mechanism offered by the IMF to countries with solid economic policies to access resources during international crises without additional conditions. Colombia had renewed this instrument without major obstacles since its first approval 15 years ago, with the latest renewal approved in April 2024 for a two-year period.

Financial analysts suggest Colombia needs to urgently cut its 2025 national budget by approximately COP40 trillion ($9.5bn) to avoid another breach of fiscal rules and resume the path of deficit and public debt reduction.

The ministry acknowledged the fiscal challenges following the increased deficit in 2024 but assured it is advancing in measures to strengthen collection, control spending, and manage public debt to achieve the deficit target of 5.1% of GDP in 2025, as established in the Financial Plan.