President Petro had recently warned the legislature that the country could default or declare an economic emergency, if the increase was not approved.

The Colombian Congress approved on Thursday a US$ 17.6 billion increase in the public debt ceiling, as requested by the government of Gustavo Petro. The funds are needed to comply with debt obligations and finance the administration's development plan, at a time when the coffee-growing country faces fiscal difficulties due to lower tax collection.

President Petro had recently warned the legislature that the country could default or declare an economic emergency, if the increase in the debt quota was not approved.

Latin America's fourth largest economy faces difficulties due to lower tax collection compared to the goals, owing to a slowdown in Gross Domestic Product (GDP) growth. The independent committee that monitors the country's public accounts warned that Colombia could fail to comply with the fiscal rule this year.

"This clarifies the rules of the game going forward on how public credit must be managed," said the Minister of Finance, Ricardo Bonilla, after the approval of the project.

Last week, the Colombian Ministry of Finance announced a spending cut of 20 billion pesos (US$4.88 billion) for this year and increased debt due to the drop in tax income, thereby increasing the fiscal deficit goal to 5.6% of GDP, from a previous 5.3%.

In May last year, Congress approved the government's National Development Plan, the roadmap that establishes the economic and social objectives, programs and goals for the next four years, with investments of 1.155 trillion pesos (US$ 281.5 billion).

The Ministry of Finance assured that the debt increase is consistent with the fiscal deficit projections.

The expansion of the debt ceiling is a procedure that is carried out every four years before Congress.