Why Colombia’s Election Could Have Significant Consequences For Some U.S. Companies And Investors

Colombians will vote in the first round of the presidential election on May 31. If no candidate wins more than 50% of the vote, a run-off between the top two candidates will take place on June 21.

The election comes at a delicate moment for the country’s economy and for foreign investment sentiment. Colombia remains heavily dependent on energy, mining, resource extraction, and agribusiness, while tourism has expanded rapidly in recent years.

The United States remains Colombia’s most important economic partner. More than 650 U.S. companies operate in the country and support over 150,000 jobs. Bilateral trade in goods totals $37.2 billion.

However, U.S. investment in Colombia fell to $3.38 billion in 2025, raising concerns about investor confidence ahead of the vote.

Investors are now watching closely to see whether the country moves toward deeper state intervention in the economy or pivots back toward a more market-friendly model.

Fiscal concerns have become one of the central issues in the race.

Incumbent President Gustavo Petro’s administration has increased taxes on businesses and wealthy individuals while overseeing historically high levels of public spending. His preferred successor, Senator Iván Cepeda, currently leads in polling and is expected to continue many of Petro’s economic policies if elected.

Economists have raised concerns about Colombia’s debt-to-GDP ratio. Some investors are also closely watching the possibility that a new administration could gain influence over appointments at the central bank.

María Claudia Lacouture, president of the Colombian-American Chamber of Commerce, told International Business Times that Colombia faces growing pressure to restore fiscal confidence.

“Colombia needs a serious discussion about the quality of public spending,” Lacouture said. “The next government will inherit more than just a budget; it will inherit a test of fiscal confidence.”

Some analysts suggest a Cepeda presidency would pose risks for existing and prospective investors because of the likelihood of additional tax increases.

“If Cepeda wins there will be an offloading of investments,” said Sergio Guzmán, director at Colombia Risk Analysis, a political risk consultancy.

However, he added that the scenario would also present openings for some investors: “Individuals and institutions with a higher appetite for risk will find opportunities.”

Cepeda is expected to face either right-wing Senator Paloma Valencia or hard-right businessman Abelardo de la Espriella in the second round.

Both candidates have proposed reducing taxes and cutting public spending in an effort to create a more business-friendly environment.

Valencia has proposed lowering the corporate income tax and eliminating the wealth tax. De la Espriella went further, pledging to slash state expenditure by 40% over four years.

Guzmán said a victory by either right-wing candidate could trigger a short-term investment boom.

At the same time, 1.4 million Colombians are employed by the state, mostly as teachers and uniformed personnel, so reducing public spending may lead to a significant rise in unemployment.

Given Colombia’s economic growth in recent years has been driven largely by domestic consumption, drastic cuts could lead to a recession such as was seen in Argentina in 2024 following President Javier Milei’s fiscal reforms.

Energy policy has also emerged as a major issue for foreign investors.

Petro’s administration has promoted the transition away from fossil fuels, imposing a moratorium on new oil and gas exploration and overseeing a fall in production at state oil company Ecopetrol.

During his tenure, Colombia has seen a major increase in solar power capacity, but gas prices have risen as the country has become more reliant on imports.

Cepeda has said that he wants to meet business and union leaders to work towards a consensus on energy transition.

Lacouture warned against dismantling Colombia’s fossil fuel infrastructure too quickly.

“The energy transition is necessary, but it must be orderly, gradual, and technically sound,” she said.

“A poorly designed transition does not accelerate the future; it makes the present more expensive.”

Both Valencia and de la Espriella support expanding mining and fossil fuel extraction, including hydraulic fracking.

Giovanni Franco Sepúlveda, who served as vice minister of mines under Petro, said de la Espriella’s proposals would be viewed most favorably by the mining sector because of his support for foreign direct investment and stable investing conditions.

Polls suggest either right-wing candidate would be favorite to defeat Cepeda in a run-off at present.

According to Guzmán, markets will rally if Cepeda fails to reach 38% vote share in the first round, as this would make it harder for him to reach the roughly 44% likely needed to win the second round, scheduled for June 21.

Another point of difference between the candidates concerns exchange rates.

Senator Valencia has defended the independence of the central bank to raise interest rates in order to stabilize the exchange rate and control inflation.

Meanwhile, both Cepeda and de la Espriella have argued that high interest rates are stifling the economy.

The next president will be able to select two new members to the 7-person board of directors of Colombia’s central bank.

If de la Espriella or Cepeda were able to gain more influence over the central bank, it could result in increased competitiveness for Colombia’s exports.

Beyond monetary policy, tax and energy, investors are also focused on broader concerns about regulatory stability and transparency.

“Transparency and the fight against corruption are not secondary issues: they are essential conditions for a company to make long-term decisions,” Lacouture said.

“The greatest risk is not the election itself,” she added, “but the signals the market receives regarding trust, the rules of the game, and genuine dialogue.”