Suspension of the fiscal rule faces its first lawsuit in the Council of State

Following the heated debates that have erupted in the country and the fears sparked by the Ministry of Finance's recent announcements regarding the government's decision to suspend the fiscal rule by activating the escape clause, the country faces its first judicial challenge; this debate will move to the courts.

All of this is due to a lawsuit filed by Pedro Nel Ospina, who filed his appeal with the Council of State, requesting the annulment of the administrative act adopted by the Higher Council for Fiscal Policy (Confis) that authorized this exceptional measure, considering that it did not comply with the established legal or constitutional requirements.

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According to the plaintiff, the activation of the escape clause, a provision incorporated into Law 2155 of 2021 as part of the fiscal rule reform, was arbitrary, politically motivated, and legally unfounded. In his view, the government improperly used a tool designed for extraordinary shocks, such as natural disasters or pandemics, to justify structural fiscal imbalances that, although serious, were foreseeable and are part of the normal functioning of the economic cycle.

The lawsuit, filed on July 1, 2025, argues that the decision by Confis and the Ministry of Finance violated fundamental principles such as legality, fiscal sustainability, and good faith. It also argues that the suspension of the fiscal rule weakens institutional controls over the management of public spending and creates a dangerous precedent by allowing political decisions to be disguised as technical necessity.

Among the main legal arguments, the plaintiff emphasizes that the Government failed to demonstrate the existence of an "extraordinary and unforeseeable event" that would justify triggering the escape clause, as required by Article 28 of Law 2155, since, according to the text, the reasons cited—the drop in tax revenue, the increase in spending, and the growth in debt service—were not only known for some time, but were also the result of prior political and fiscal decisions by the same Government.

The lawsuit also points out that the required procedure to activate the clause was not adequately followed and, in particular, questions the government's failure to present a rigorous technical analysis to support the urgency of the measure, and the failure to give a real role to the Autonomous Committee of the Fiscal Rule (CARF), whose technical advisory function in these processes is key to ensuring independence and objectivity.

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According to the lawsuit, the activation was based on weak assumptions rather than solid evidence, and the CARF ruling was ignored despite its warning that this was not an extraordinary event. Similarly, the lawsuit alleges that the government misused its powers by using an exceptional tool for ordinary purposes.

This, in the plaintiff's view, constitutes a violation of the principle of legality and a distortion of the escape clause, whose original purpose is to provide temporary fiscal respite in cases of force majeure, not to relieve the Executive from its fiscal responsibility in election years or years of low budget execution.

In addition to the legal analysis, the lawsuit highlights the institutional and economic risks of the measure, noting that by suspending the fiscal rule without clear technical and legal support, the government compromises the credibility of fiscal policy, increases uncertainty about the management of public finances, and generates negative signals for credit rating agencies and investors.

" An exceptional figure is being used to maintain an unsustainable level of spending without a clear roadmap to return to fiscal discipline," the text states.

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As specific measures, the plaintiff requests that the Council of State declare the nullity of the Confis administrative act that triggered the escape clause and order the immediate reinstatement of the limits established under the current fiscal rule. He also requests that a warning be issued regarding the misuse of this provision, to prevent it from becoming an instrument for permanent flexibility in the fiscal framework.

This lawsuit is the first formal legal challenge to the government's decision to suspend its fiscal anchoring rule, and its outcome could set a key precedent regarding the legal limits of economic policy decisions and the balance between fiscal flexibility and institutional accountability.