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 third year of its first ever left-wing government, under President Gustavo Petro. This period has been marked by strident announcements from the administration, rather than by tangible achievements: President Petro has announced extensive and business-averse reforms in key sectors such as healthcare, pen - sions, employment, 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 comprehensive 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 recently ruled that the reform had failed to properly comply with a for - mal requirement during its approval process, and thus sent it back to Congress for proper approval, which is expected to happen within 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 security and added an undesirable level of unpredictability to the busi - ness climate. Additionally, other adverse factors such as constrained GDP growth and persis - tently high inflation and interest rates, as well as a recent government decision to temporarily suspend the “structural budgetary balance rule”, have further contributed to this instability.
Moreover, a recent uptick in political violence has led to even more political tension and uncer - tainty. Despite the challenging environment, a number of significant deals were executed in the last year, albeit mostly with local investors as purchasers and relevant multinationals as sellers. The most significant transactions announced during the first quarter of 2025 were Scotiabank’s decision to sell its retail banking operations to Davivien - da (a major Colombian bank) and Telefónica’s agreement to sell its majority stake in Colombia Telecomunicaciones (Coltel) to Millicom España, a subsidiary of Millicom International Cellular SA (a company based in Luxembourg and listed on the New York Stock Exchange). Both transac - tions are subject to regulatory approval. Also, Ecopetrol, the largest company in Colombia and which is controlled by the Colombian govern - ment, has been involved in the acquisition of several renewable energy projects. Regional and Local Climate Except for Argentina and Ecuador, the region has been shifting to the left for a number of years, and governments have on occasion adopted stances and policies that are hostile to private investment. This is especially pertinent because large investors usually do not view individual countries in the region (except Brazil) as sepa - rate markets, but rather categorise them into three or four major markets (eg, Southern Cone, Andean Region, Pacific Rim countries, Carib - bean 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.
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