Colombia's Comptroller General has initiated an investigation into the Ministry of Finance's highly criticized early closure of a $9.3 billion total return swap (TRS) in Swiss francs. This move, while intended to reduce the national debt, has faced scrutiny from analysts and international rating agencies like Fitch due to concerns about transparency and the legality of the operation. The Comptroller General is examining the transaction for potential constitutional violations and a perceived lack of clear disclosure regarding its financial mechanics and implications. The investigation highlights ongoing fiscal doubts surrounding the Petro administration's strategies.
The Ministry of Finance, led by Public Credit Director Javier Cuéllar, advanced the termination of the TRS, originally set to conclude in late July 2026, citing favorable market conditions. Cuéllar claimed the operation would reduce the country's gross debt by $28 billion and yield approximately $3.7 billion in total savings, including a $400 million gain from the timely liquidation. He emphasized that the TRS allowed for efficient public debt management and aimed to cancel the swap before upcoming presidential elections by redeeming some of the collateralized debt.
However, Fitch Ratings criticized the government's debt strategy, alleging maneuvers to present a lower fiscal deficit. Fitch questioned the transparency of the TRS and other operations, like a private placement of $23 billion (1.2% of GDP) in TES bonds with Pimco, which occurred at a higher interest rate (13.15%) than market emissions. The agency suggested that any gains from the TRS might be due more to currency fluctuations than a sound debt strategy. The Contraloría General previously noted that the TRS "never was a financing instrument of the National Government" but was used for efficiency in public indebtedness, aiming to withdraw $100 billion from the country's gross debt. Despite the government's positive outlook, significant concentrations of debt maturities in 2026, 2029, and 2030, coupled with sustained primary deficits and high real interest rates, raise concerns about national debt sustainability.
The Comptroller's broader review of the government's debt operations, including a $23.24 billion sale of TES B bonds in December 2025 to bolster liquidity and a $4.95 billion external bond issuance in January 2026, largely found legal compliance. However, the regulatory body warned about the substantial debt maturities in 2029, totaling approximately $89.6 billion, comprising global bonds and TES B in pesos and UVR. While the net government debt decreased from 59.3% of GDP in 2024 to 57.8% in 2025, remaining within fiscal rule limits, the Contraloría stressed that future debt trajectory depends on economic growth, interest rates, exchange rates, and the fiscal balance. The ongoing investigation into the TRS adds another layer of scrutiny to Colombia's financial health and debt management practices.
