AlphaIQ Colombia Economy ABM — the 71% debt limit, ratings, oil and BanRep

Colombia 2026–2050: the rescue law, the 71% debt limit, the last investment grade, oil, the peso and BanRep

Ranks scenarios, not a forecast

v0.2 · validation 49/52

Scenario

October 2026 as it stands: a 55% chance the rescue law passes in 2027Q1 (35% a year after that), delivering 50–100% of the reform path; a 35% chance the 2030 government halves the adjustment; a 60% chance exploration reopens; Brent at US$125 reverting to its 2010–25 level.

Monte Carlo paths1,000

Single shared random stream

Paired (default, and what the Python model of record uses): path k has the same seed in every scenario, so comparisons are paired and the dashboard reproduces the validation run digit for digit.

Horizon97q → 2050

Learning bondholders

Investors are of two kinds: some expect the spread to return to what debt and ratings justify, others bet that the last move continues. Near that level trend-followers dominate; the further the spread drifts from it, the more investors switch back to betting on its return. Off: the spread is exactly what debt and ratings justify (v0.1).

Learning rule

How sharply investors switch rule (β)1.00

How hard trend-followers extrapolate (χ)0.40

Economic voting in 2030

On: the odds that the 2030 government relaxes the adjustment rise when growth, inflation and jobs were bad in the year before the vote (to 2030Q1), and fall when they were good. Off: a fixed 35% coin flip.

Defaults come from the shared Phase 2 design v1.1: the Franke & Westerhoff (2012) herding-plus-misalignment switching rule (β 1, herding 1.79), χ 0.4 (Hommes 2011), noise scaled so the spread moves as much as EMBIG Colombia did in 1998–2024 (σ_f 0.140); vote weights from Latin American election studies. Higher β or χ makes trend-following episodes more violent.

P(rescue law passes, 2027Q1)55%

P(passes on a later attempt, per year)35%

Delivered share of the reform path (low)50%

Delivered share of the reform path (high)100%

P(2030 government halves the adjustment)35%

MinHacienda's three-phase adjustment: the 2027 budget, the economic rescue law (filed October 2026) and the development plan. If Congress passes the law, a share of the reform path (primary balance −2.3, −0.5, −0.1, +0.4% of GDP for 2027–30) is delivered; otherwise the inertial path (−4.5%) runs. The 2030 government may halve it.

Nothing has run yet. Read the page and set the scenario on the left, then press Run simulation: it runs the model in your browser.

Colombia · exposure to the region

What reaches Colombia, and what it sends

Open the cascade map →

Coming in · change in the odds of net debt > 90% by 2030 (baseline 6.2%), regional model with links on

Oil falls 40%

oil revenue

+5.0 ± 0.7

China slows

oil and exports

+1.8 ± 0.4

Global sell-off

borrowing cost +2.18 pts

+1.3 ± 0.4

US recession

sales to the US

+0.6 ± 0.2

Brazil quietly defaults

lenders, +0.21 pts

no clear change

Argentina defaults

lenders, +0.11 pts

no clear change

Venezuela sanctions snap back

no link

no clear change

Copper falls 35%

no link

no clear change

Going out

Losing the last investment grade

+0.015 pts

to every neighbour’s borrowing cost the next quarter (2% of its own +0.75 jump; ×5 in the stress case)

Currency moves with

Brazil 0.62 · Mexico 0.54 · Chile 0.50

Shares the oil price with

Mexico · Argentina · Venezuela