Sub-national public finance in Colombia

This chapter assesses public finances in Colombia from a regional perspective. In particular, it looks at how fiscal limitations on sub-national governments may undermine the feasibility of moving towards a territorial approach to economic development. The first section gives an overview of fiscal decentralisation in Colombia, and highlights the impact direct transfers from the central government have on the propensity of the sub-central governments to raise their own revenues (fiscal inertia). The second section discusses budget balancing and debt at the sub-national level. It also focuses on public investment and fiscal discipline at the territorial level. Finally, the third and final section contains a set of recommendations to improve the efficiency of sub-national public finances and establish a better framework to promote public investments.