COLOMBIA Trends and Developments Contributed by: Jaime Trujillo, Juan David Velasco, Natalia Ponce de León and Angelica Navarro, Baker McKenzie S.A.S.
Colombia’s Political Climate Colombia is currently in the fourth and last year of its first-ever left-wing government, under President Gustavo Petro. This period has been marked by stri - dent announcements by the administration, rather than tangible achievements: President Petro has announced extensive and business-averse reforms in key sectors such as healthcare, pensions, employ - ment, energy and utilities, but has failed to pass most of them through Congress. Nonetheless, he has managed to pass some of the less disruptive proposals: for example, a comprehen - sive pensions reform was approved by Congress in June 2024, and a wide-ranging labour reform was approved by Congress in June 2025. Although the pensions reform was supposed to become effective as of 1 July 2025, the Constitutional Court ruled that the reform failed to properly comply with a formal requirement during its approval process. As a result, the reform remains suspended until the Constitutional Court formally decides whether the defect was prop - erly remedied by Congress in a subsequent approval process completed in the second half of 2025. This pushback in Congress and the courts reflects positively on the Colombian system of checks and balances. However, President Petro’s leadership approach has polarised the nation, downplayed secu - rity and added an undesirable level of unpredictability to the business climate. Additionally, other adverse factors such as constrained GDP growth and persis - tently high inflation and interest rates, together with the recent government decision to temporarily sus - pend the “structural budgetary balance rule” and fail - ure to pass a new tax reform, have further contributed to this instability. Colombia held parliamentary elections in March 2026, resulting in a new Congress that is expected to remain fragmented, meaning that the approval of major reforms is likely to continue facing political con - straints in the coming years. The political landscape is now focused on the upcoming presidential elections, which are scheduled to take place before the end of the first half of 2026. The outcome of these elections will be decisive for businesses in Colombia, as it will shape the direction of policy across several areas,
including hydrocarbon exploration, energy transition, and the management and financing of the healthcare and pension systems. Despite the challenges facing the industry, several significant transactions were executed over the past year. While there was a decline in the number of trans - actions, the overall value of deals increased. Among the most notable transactions were the completion of Davivienda’s acquisition of Scotiabank’s retail opera - tions in Colombia, following receipt of the relevant regulatory approvals, as well as the integration of Tigo and Movistar’s operations in Colombia. This integra - tion involved several related transactions, including Millicom’s acquisition of the Colombian government’s equity stake in Colombia Telecomunicaciones (Coltel), following Telefónica’s earlier divestment of its partici - pation a few months prior, and Millicom’s acquisition of EPM’s stake in Tigo. In addition, the increase in the ownership stake of Brookfield Renewable Part - ners and the Qatar Investment Authority in Isagen SA ESP was also notable. In terms of sector activity, the most dynamic industries included software, renew - able energy, and banking and financial services. Regional and Local Climate After several years of shifting to the left, recent elec - tions have led to a number of countries moving towards more centrist and right-leaning administra - tions, which, to varying degrees, have reintroduced more market-oriented policies. However, this has resulted in a more heterogeneous and less predictable investment landscape, where investment conditions must be assessed on a country-by-country basis. This is especially pertinent because large investors usually do not view individual countries in the region (except Brazil) as separate markets but rather categorise them into three or four major markets (eg, Southern Cone, Andean Region, Pacific Rim countries, Caribbean Rim countries). Consequently, events in a specific country in the region tend to influence investment decisions in other countries that are considered part of the same market. Brazil – traditionally a key driver of deal activity in the region – continues to play a central role, although its economic recovery and growth trajectory have been more gradual than initially expected. Meanwhile, Mex -
232 CHAMBERS.COM
Powered by FlippingBook