Thirty trillion pesos. That is, for now, the minimum bill left by the earthquake on August 10 that Colombia will have to start paying to rebuild homes, schools, hospitals, roads, bridges, and aqueducts, recover businesses and jobs, and get hundreds of municipalities back on their feet. The problem is that the main public sub-account intended for disaster management currently has barely 47.266 billion pesos, an amount that the Government itself acknowledges as insufficient given the scale of the tragedy.
The gap between these two figures sums up the challenge that begins after the immediate care of the victims: to secure the money, decide where it will come from, and build an organization capable of quickly turning it into reconstruction, just as public finances are going through a tight situation, while the 30 trillion pesos — around 1.5 percent of GDP — are only a preliminary estimate as the damage assessment continues.
The Government already has the declaration of national disaster and, as of this week, the state of economic emergency to start the task. Decree 1261 of August 19 opens a wide toolbox to move budget items, flexibilize royalties, temporarily use special funds, utilize assets managed by the State, contract credit, and accelerate investments. But it does not yet constitute the reconstruction budget nor establish how much money will come from each source.
That account, as the government itself points out, will begin to clear up with the legislative decrees that develop the emergency and with the definitive diagnosis of the destruction. Meanwhile, Colombia has already started mobilizing credits from multilateral organizations, international cooperation, corporate donations, and family contributions. The challenge will be to coordinate that pool of public and private resources and avoid that the urgency to rebuild ends up producing duplications, waste, or investments disconnected from the needs of the territories.
Extended tragedy
Unlike the 1999 Coffee Axis earthquake, the reconstruction will now face the challenge of addressing a much more dispersed tragedy. The Ungrd balance, as of Friday, records damage in 16 departments and 481 municipalities, with 329 dead, 4,600 injured, and 314,751 affected people. Additionally, 31,445 homes were destroyed and 163,884 damaged.
The economic dimension will also be considerable. The affected regions represent more than 14 percent of the national economy and have a significant role in freight transport and food supply. Therefore, besides recovering homes and infrastructure, the speed of reconstruction will be crucial to restore productive activity, employment, and logistics.
Moving resources
The first possibility offered by the economic emergency is to allow the State to reorganize its own resources. Decree 1261 enables additions, transfers, and other operations on the General Budget of the Nation, starting from the fact that the appropriations approved for 2026 did not contemplate a catastrophe of this magnitude.
Bruce Mac Master, president of Andi, considers that this authority will be decisive because it will allow the Government to reprioritize spending after the earthquake and, at the same time, create mechanisms to execute resources more quickly.
The range is broad. The Government will be able to flexibilize the use of the General System of Royalties, including resources assigned to affected departments and municipalities, and contemplates resorting to the Savings and Stabilization Fund (FAE) through loans that must be repaid, without compromising the fund’s own obligations.
It will also be able to temporarily use balances from special funds and resources with specific destination, redirect items from projects that have not started or became unfeasible, and mobilize assets managed by the Special Assets Society (SAE) and Frisco. Some properties from asset forfeiture processes could serve for shelters or resettlements, while certain assets could be monetized to obtain liquid resources.
But there is a fundamental clarification: the decree enables these sources, but does not yet establish how much money will effectively come from them. That will begin to be known with the legislative decrees that develop the emergency.
Mauricio Cárdenas, former Minister of Finance, considers that the effort should extend to the 2027 Budget. He proposes combining an ordinary budget with austerity measures and another dedicated to reconstruction, so that savings obtained through cuts can be directed to rebuilding the destroyed areas.
Among the options, he mentions reviewing expenses, state payroll, and service contracts, and even eliminating funds or entities that are no longer priorities. His proposal is that part of the necessary money comes from changing priorities before seeking new sources.
Taxes: yes or no?
That question, according to consulted sources, can only be answered once it is clear how much the reconstruction will finally cost and how much the Government can obtain from the sources it has just enabled.
For now, the Executive hopes not to have to resort to new taxes. In its favor is that the estimated nearly 30 trillion pesos will not have to be disbursed all at once.
Mac Master estimates that Colombia will be rebuilding for three or four years. Therefore, he considers that the fiscal exercise should establish how much money is needed in each fiscal year and not charge the entire cost to the current budget.
“The exercise must be not only to know how much money is needed, but how much money is needed in each of the fiscal years,” he points out.
Juan Camilo Restrepo, former Minister of Finance during the Coffee Axis earthquake and one of the architects of the Forec, proposes another possibility. If new taxes are ultimately needed, he considers it preferable to use the extraordinary powers of the emergency to establish temporary taxes aimed at reconstruction, rather than resorting to a general tax reform.
The 1999 experience provides a reference. According to Restrepo, between 80 and 85 percent of the resources used to rebuild the Coffee Axis came from the National Budget and about 15 percent came from multilateral organizations. For this occasion, he proposes combining reductions in non-priority spending, possible tax adjustments, and debt management alternatives.
Therefore, the discussion about taxes remains open. The answer will depend on the final bill of the earthquake, how much can be reassigned within the State, and the additional resources that can be obtained.
Credits and donations
But Colombia began activating resources from multilateral organizations and international cooperation almost from the very moment of the tragedy, although it is key to understand that part corresponds to credits that must be repaid and another to cooperation or non-reimbursable donations.
The World Bank has already disbursed 200 million dollars and, later, the Ministry of Finance processed the request to increase that quota by another 250 million. Added to this are 300 million from the IDB in contingent financing for emergencies, while multilateral organizations, governments, and cooperators have also announced donations and humanitarian aid.
The distinction will be necessary to determine how much of the reconstruction will end up being financed with debt and how much with resources that will not have to be repaid. It will also be necessary to separate aid to immediately assist the victims from that which can be used in reconstruction.
In that scenario, another front began to be built outside the public budget.
Mac Master stated that the collection promoted by Andi is approaching 250 billion pesos, while conversations continue with other business groups to coordinate efforts. Added to this are contributions announced by some of the country’s main business families charged to their assets, amounting to around 900 billion, as well as contributions made directly by companies and donations in kind.
But there is no single pool here either. The resources are distributed among different foundations, companies, and vehicles that will now have to coordinate among themselves and, above all, with the Government.
For Mac Master, that may be one of the greatest challenges. The priority is not to concentrate all private money in one organization, but to build a network capable of identifying needs and avoiding that several entities end up addressing the same problem while others remain uncovered.
“The big issue here is to reach the territory,” he warns.
Andi works with business foundations and regional organizations and considers it necessary to focus efforts on large affected areas. That coordination should extend to the National Government, territorial authorities, and the so-called ‘Miracle Fund’, which will play a central role in structuring the reconstruction.
“We need to understand what the Government will do so as not to do exactly the same thing,” says Mac Master. The private sector seeks to complement state interventions, attend other areas, or focus on needs that the Government cannot cover.
The challenge, execution
Getting the money is only half the problem pecause after gathering the resources, they must be executed quickly and with control. For this, the emergency will allow flexibilizing limits on state contracts, intervening in territorial infrastructure when local authorities lack capacity, and simplifying procedures. It also seeks to expand Works for Taxes to affected municipalities to link resources and private capacity with reconstruction projects.
The decree also contemplates rate compensations, guarantees, and grace periods; special lines for microenterprises and rural producers; support to preserve jobs; and greater flexibility in subsidies and housing solutions. For now, these are mechanisms to be developed: the upcoming decrees must specify their resources, beneficiaries, and access conditions.
María Claudia Lacouture, president of AmCham Colombia, sums up the challenge by stating that besides securing resources, it will be necessary to “put the house in order.” The measures, she maintains, must be agile, focused, and transparent, related to the emergency and with traceability and control over every peso.
The lesson of 1999
Securing and executing resources leaves another challenge pending: how to coordinate a reconstruction that must reach hundreds of municipalities. The Government looks to the experience of Forec, created after the 1999 Coffee Axis earthquake and described by Juan Camilo Restrepo as a “great central planning brain” with decentralized execution and participation of social and private organizations.
In practice, the scheme separated planning from execution: resources were managed through a trust, while reconstruction in the territory was supported by zonal managements with participation from social organizations, universities, and the private sector. That combination sought to speed up contracting and payments, maintain control over the money, and bring execution to the affected communities.
That model, recognized by the World Bank for its effectiveness, inspires the ‘Miracle Fund’, although the current tragedy is territorially much more extensive. Its manager, Jaime Uribe, is working on the needs diagnosis and the legal structuring of the fund to define what must be repaired or rebuilt, what damages are insured, and where public intervention must focus.
Coordination will be crucial because alongside the State will act multilateral organizations, entrepreneurs, donor families, and foundations. Mac Master proposes a kind of “control tower” to know who is doing what and where, to avoid duplicating investments while other territories remain unattended.
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