Colombia and the IMF: no to the debt, no to capitalism!

On Saturday, 26 April, it was announced that the International Monetary Fund had decided to put ‘under review’ the continuation of the line of credit it maintains with the Colombian government. This decision is a response to the economic instability looming in the country, which is nothing more than the national expression of the increasingly turbulent international crisis.

[Originally published in Spanish at colombiamarxista.com]

But it is also a sign of the hypocrisy of the so-called ‘liberal rules-based world order’, which seek to free the imperialist powers, and above all the United States, from the crisis by shifting the effects onto the poorest countries, while dictating that the working class should pay for the current economic situation.

This attack has also combined with a critical moment in the country, when the representatives of the Colombian oligarchy within the state apparatus are closing all doors to President Gustavo Petro’s programme of social reforms. They are doing so completely undemocratically, imposing their will on the millions of workers who voted for Petro’s programme. The sabotage of this programme by the ruling class and its parliamentary stooges demonstrates that the profits of the Colombian bosses and their international partners are more important than the welfare of the oppressed classes.

The IMF’s threat to withdraw its loans only increases the pressure on a government that has already exhausted all the avenues by which it could push through its radical programme within the margins of the current system, which is rotten and has nothing more to offer.

Petro has correctly called for the masses to defend these reforms on the streets, resulting in mobilisations of tens of thousands of workers and youth. But it is clear that this is not enough. In the context of the current crisis, the attacks by international imperialism and the national capitalist class will increase, and it will become increasingly necessary to break completely with this system.

The abyss deepens

Colombia was one of many countries that, during the COVID-19 pandemic, resorted to debt to keep its economy afloat. At least that was the justification given by then-President Iván Duque for making use of the International Monetary Fund's (IMF) Flexible Credit Line for the first time in the country's history. Indeed, he was not the only one to make this decision: at the time, many governments around the world adopted similar measures. However, this ‘lifeline’ mainly benefited large private companies, both in Colombia and in the rest of the world, as demonstrated by the Avianca bribery scandal.

Colombia was one of many countries that, during the COVID-19 pandemic, resorted to debt to keep its economy afloat. At least that was the justification given by then-President Iván Duque / Image: Inter American Dialogue, Flickr

The money that was borrowed – $5.4 billion, with a repayment term of five years from its disbursement in September 2020 – has become a suffocating burden on the national economy, which in recent years has shown signs of stagnation, exacerbated by external pressures. In fact, Gustavo Petro's government has already paid off more public debt than any government in the previous two decades, most of it inherited from previous administrations that resorted to borrowing in response to their own crises.

To make matters worse, the current government has also had to increase the debt, which, according to DANE data, increased by 74.9 trillion Colombian pesos (nearly US$18 billion) in the fourth quarter of 2024 alone. By the end of the year, the IMF reported a debt-to-GDP ratio of 61.3 percent. Although it managed to decrease this by passing a tax reform in 2022-2023, the government is faced with a series of inherited fiscal timebombs, such as the increasing cost of fuel subsidies, the maturation of numerous public debt securities, and the slow execution of infrastructure projects, which are all strangling the budget.

In effect, a significant part of the government's work has consisted of managing the inherited fiscal crisis, leaving it with very narrow margins for fully implementing its programme of social transformation. This has forced the government to take on new debts, both to comply with the fiscal rules and to carry out part of its political commitments.

The result has been a combination of lower-than-expected tax revenues, rising debt – particularly domestic debt – increased central government borrowing, and a series of “budgetary arrears”, which are nothing more than accounting mechanisms to postpone government payments.

In this context, the government decided to bring forward the collection of ‘withholding taxes’ from corporations for this year, which in simple terms means requiring companies to pay taxes in advance of the originally set deadline. This provides immediate funding but, in subsequent years, compromises the sustainability of public spending and further accelerates the pace of indebtedness. In fact, there is already talk of a possible violation of the so-called ‘fiscal rule,’ which establishes that public debt should not exceed 70 percent of GDP.

It is precisely this point that the International Monetary Fund has placed under scrutiny. According to the agency, the availability of the credit line with Colombia is “under evaluation”, and its renewal will depend on the results of an ongoing review under the Article IV Agreement, which implies direct supervision of the country's finances and fiscal commitments.

This vicious circle, which is seemingly inescapable, is a direct product of the logic of capital and the naive – if not deliberately complicit – adaptation to its economic rules by both liberalism and reformism. Both approaches accept as ‘natural’ and ‘inviolable’ norms that in reality serve to guarantee the perpetuation of the system for the benefit of a few.

Debt, in this context, is not simply the result of poor administration but a concrete manifestation of the structural crisis of capitalism: a crisis of overproduction. When markets begin to saturate and profit rates threaten to fall, the system clings to debt as a lifeline, injecting fictitious capital to artificially sustain itself. But it does so without solid material backing, thus creating the conditions for even deeper and more frequent crises.

As Rosa Luxemburg rightly warned in Reform or Revolution, credit, far from being a solution to crises, becomes a tool that facilitates and aggravates them:

“We see that credit, instead of being an instrument for the suppression or the attenuation of crises, is on the contrary a particularly mighty instrument for the formation of crises. It cannot be anything else. Credit eliminates the remaining rigidity of capitalist relationships. It introduces everywhere the greatest elasticity possible. It renders all capitalist forces extensible, relative and mutually sensitive to the highest degree. Doing this, it facilitates and aggravates crises, which are nothing more or less than the periodic collisions of the contradictory forces of capitalist economy.”

The hypocrisy of capital

Despite all the fanfare that accompanied the IMF's recent pronouncement, the truth is that this move has generated strong mistrust in the government from both the domestic and international markets. The message being sent by the IMF is clear: it is a vote of no confidence in Petro’s ability to manage crisis-ridden Colombian capitalism. The reaction of the markets confirmed this: government debt securities (TES) suffered a considerable fall, the Colombian Stock Exchange recorded declines in share prices, and the Colombian peso depreciated against the US dollar.

The political response was swift. As expected, the most reactionary elements of the opposition and the establishment reacted with cries of alarm, blaming the current government for alleged ‘economic mismanagement’ and accusing the left of damaging international confidence and closing the doors to new sources of financing. Former ministers, journalists, academics, opposition figures and other representatives of the old regime were quick to come up with their usual recipe for maintaining good relations with the IMF: more austerity.

However, this entire media scandal is deeply hypocritical. It deliberately ignores the structural causes of the country’s crisis and the direct responsibility of those who have governed for the last 20 years. For figures such as Vicky Dávila, what is happening today is an isolated phenomenon, unrelated to the governments of Uribe, Santos and Duque – whom she has defended openly and covertly – or to her political family, which has been implicated in multiple scandals and directly benefited from loans acquired during the 2020 pandemic.

Nor is there any mention of the fact that the pressure of the global economy is affecting all countries, and that the foreign debt imposed by international organisations such as the IMF functions as a mechanism of control by foreign finance capital. Its purpose is none other than to facilitate the plundering of our resources and the exploitation of our working class at low cost, while hindering any serious attempt at national development. This is nothing new. Our ruling class has consistently fulfilled its role as a servile intermediary, fervently defending the interests of imperialism and unconditionally accepting its demands, while offering only violence and misery to the people.

A recent example of this attitude can be seen in the sabotage of Petro’s Labour Reform. Eight senators decided to block an initiative backed by more than ten million voters, demonstrating once again that the ruling class has no interest in so-called democracy but, on the contrary, will use any undemocratic loophole they can to subvert the will of the majority and protect their own pockets.

The reality is that this elite has nothing to offer beyond systematic attacks on the working class, the peasantry and the youth. It is completely bankrupt. It is unable to connect with the masses because it has no vision for social change and no legitimacy. Today, its only political tools are the corrupt institutions of Colombia's so-called ‘democracy’.

Crisis of bourgeois democracy

But the position of our elites is only a reflection of that of the capitalists globally. Today, it is increasingly cornered. Every new move it makes to maintain stability only leads to deeper turmoil, reflected in attacks on the working class and its quality of life.

The president of the IMF himself said:

“The global economy is at a critical juncture. After several years of growing concerns about trade, trade tensions have risen sharply, leading to greater uncertainty, market volatility and risks to growth and financial stability. Growth is expected to slow in the short term, with disinflation to continue, albeit at a slower pace. Intensified downside risks dominate the outlook, in an already challenging environment of weak growth and high public debt levels. Wars and conflicts impose enormous humanitarian and economic costs. Transformative forces, such as digitalisation and artificial intelligence, demographic changes and climate transitions, present opportunities but also challenges.”

The truth is that the war in Ukraine, the genocide in Palestine and the acceleration of protectionism as a result of Trump's tariffs have pushed the world to the brink of recession / Image: Gage Skidmore, FlickrThat does not seem like a very hopeful outlook. The truth is that the war in Ukraine, the genocide in Palestine and the acceleration of protectionism as a result of Trump's tariffs have pushed the world to the brink of recession. The ruling classes have little room for manoeuvre. As things stand today, all that remains for many of them is to put pressure on their working classes to pay for the crisis. But that means instability and class struggle.

The only way the imperialist powers could avoid or reduce this would be to spread it to other countries. For that, they need to have governments in the dominated countries that are on their side, such as Argentina's Milei. His government is not doing any better economically speaking, and yet, because he is loyally carrying out savage austerity policies, Argentina still receives support from the IMF.

That is why the IMF’s decision to review Colombia’s line of credit, at a time like the present, in a pre-election period, with the government and its reforms under attack, has an obvious political overtone.

Behind the rhetoric, the International Monetary Fund and the World Bank serve to maintain the economic hegemony of western imperialism, and of the United States in particular. The Fund claims that its ‘fiscal discipline’ is needed to prevent economic cycles from leading to a ‘Great Depression,’ while the World Bank seeks to ‘help’ development by providing funds and technical advice. In reality, their ‘support’ is entirely aligned with the interests of western imperialist powers, not the real needs of the recipient states.

Today, international imperialism needs to control its dependent markets more than ever. This is because the only way they can avoid a crisis in their own territory is by exporting misery to others. For weak and dependent nations, this translates into political pressure exerted by imperialist powers and institutions, which aim to force the governments to attack their working class with all kinds of cuts.

This undoubtedly puts the Petro government in an impasse, as it finds itself increasingly cornered by the impossibility of implementing its reforms without directly attacking the root of the problem: capitalism in its imperialist phase. The further the international crisis progresses and the more the turbulence intensifies, the clearer the need for the reformists to take sides will become: either with the workers or with the ruling class.

For reforms, fight for the revolution

The Petro government has not found a way to achieve its programme of reforms. But the president has understood that this is a struggle that cannot remain within the halls of the state. That is why he has called on his supporters to defend his programme in the streets with demonstrations. The working class has responded courageously to these calls on more than one occasion.

The streets are undoubtedly the place where these struggles must take place. The large mobilisations that have taken place in recent months, including those on 18 March and 1 May, are proof of how fierce the Colombian working class, which still remembers the days of the 2021 National Strike, can be. The struggle of the workers to defend the democratic rights they have previously won is essential, and as Marxists we support, accompany and defend it.

However, it is important to highlight the fact that this shows the limits of a system which, in crisis, is not willing to leave any rights of the oppressed classes standing. Capitalism has no solution to the problems of inequality and redistribution. The fact that the problems of Colombia are rooted in the capitalist system itself closes the door to any lasting change or to the ruling classes allowing such change to advance peacefully. That is why the struggle must be intensified with a campaign of militant mobilisations, union organisation in the workplace and preparation for strikes that would directly affect the economic interests of the oligarchy.

Above all, we must understand that as long as the rule of capital remains in place, there will be no way to make the victories of the working class permanent, much less attack the heart of global capitalism: the imperialism that is sustained by the suffering of our workers. That is why, in order to attack imperialism and its hypocrisy, we must fight to topple the oligarchy and its corrupt institutions at home, replace it with a genuine workers’ democracy, and carry out the socialist transformation of society in Colombia and around the world.