REESTABLISHMENT OF FREE GOLD MARKET/REHABILITATION TAX/EXCHANGE POSITION

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP83-00423R000900560001-0
• Release Decision: RIPPUB
• Original Classification: R
• Document Page Count: 2
• Document Creation Date: November 9, 2016
• Document Release Date: October 22, 1998
• Sequence Number: 1
• Publication Date: August 14, 1953
• Content Type: REPORT

25X1X6
1~ 3 LI LJf day Approved For Release 1999/09/10 : CIA-RDP83-00423R000900560001-0
Supplement to:
25X1A2g
SUBJECT: Reestablishment of Free Gold Market/ Date
Rehabilitation Tax/Exchange Position
DATE ACQUIRED: Late Jul 53 and earlier
(BY SOURCE)
DATE (OF INFO):
27 Jul 53
Responsive to:
This oc s information affecting the national def i ed
States, within the mea 18, Sectio , of the U. S. Code,
as amended. Its transmission o contents to or receipt by an
unauthorized per i ed by law. The repro is report is
25X1X6
This UNEVALUATED INFORMATION is supplied for the possible interest of your analysts.
It does not warrant dissemination by 25X1A2g
1. The decree reestablishing a free gold market, which was issued a few days ago, has
been the salient feature of this country's economy during July _19537. This step
was taken in an effort to improve the situation of gold producers, who were hard hit
as the payment of a bonus of Col $30 per ounce had to be discontinued because of the
decline in prices of export certificates from about 150% at the end of last year to
about 78% a few weeks ago. The bonus had been paid out of the proceeds of these
certificates, which originated from gold exports.
2. The trade and export of gold is now entirely free. If gold is exported, such ex-
ports require prior registration and the foreign exchange proceeds must be deposited
with the Bank of the Republic or an authorized commercial bank. These dollar earn-
ings may freely be sold in the open market and can be used for any purpose. However,
mining companies are no longer entitled to receive foreign exchange to pay for their
imports of machinery, implements and materials as well as dividends, capital amor-
tization or any other expenses payable in foreign exchange, which they are now
supposed to defray by means of the proceeds of their gold exports.
3. Although it is much too early to say what the effect of this measure is likely to be,
it has generally been welcomed as a desirable step toward the ultimate goal of an
entirely free foreign exchange market.
Ii. In an effort to aid those people who had to leave their properties because of in-
security in the backlands and who are now returning to their farms and ranches, our
Government has decreed a so-called rehabilitation and development tax of 20%, which
will be levied on the capital and income taxes for 1952 to be paid by individuals and
corporations provided that these taxes exceed Col $10 thousand in each case. As.our
Government operates on the principle of a balanced budget, there was no alternative
to finance this restoration program but to raise the above-mentioned additional tax.
The effect of this legislation upon the stock market, however, was less marked than
some observers had anticipated and after having suffered a setback security prices
rallied.
RE D
in the USA of CIA and the Intelligence core
o_ ____ec:?on and Dissemination, CIA.
concurrence
State, Army, Navy, Air and FBI.
This report is To
OFFICIALS ONLY f' 23604
ou the
ector of the Office
RETURN TO CU
evil
Approved For Releat9/09/10: CIA-RDP83-00423R0009 0
 Approved For Release 1999/09/10 CIA-RDP83-00423R000900560001-0
5. Industrial and trade activity has continued at a satisfactory pace and a definite
note of optimism is evident in business circles. As coffee prices have been edging
upward lately and are expected to hold for some time, the outlook for the coming months
as a whole may be considered bright.
6. As compared with last month June 19537, Colombia's exchange position has improved
notably. As of 18 July foreign exchange purchases exceeded releases by US$11,411,000.
The ratio of exports to imports has also improved: registration of the former aggre-
gated on the same date US$275,418,000 whereas import registers amounted to
US$266,453,000. These figures compare favorably with those a year ago, when import
licenses totaled US$220,977,000 but export licenses, on the other hand, amounted only
to US$210,554,000.
7. As a result of the increase in dollar holdings of the Bank of the Republic, the
currency in circulation has also risen as shown in the table below:
17 Jul 53
19 Jun 53
(Thousands omitted)
18 Jul 52
Circulating currency
Col $550,996
534,33?
503,109
Gold Reserve
US
98,199
97,631
82,857
Dollar Reserve
78,548
64,193
38,422
Special deposits abroad
4,169
3,959
7,998
Other deposits
10,000
15,000
Total Reserve Ratio
58.57%
58.29%
44.04%
8. The Finance Minister recently emphasized that it is the new Government's intention
to encourage foreign investments in this country to give an impulse to crude oil
production, its refining and transport. It should be widely known, he added, that
the new Administration tends in no way whatsoever toward the nationalization of an
industry which normally pertains to the private initiative and interests. The contrary
could only be explained in case that private capital should lose interest in this
important field of economy, which, however, does not even seem probable in view. of
Colombia's policy of guarantees and encouragement, which will be continued now
thoroughly and decidedly.
RES
SECURITY INFO
Approved For Release 1999/09/10 : CIA-RDP83-00423R000900560001-0