BANKER'S COMMENTS ON ECONOMIC DEVELOPEMENTS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP83-00423R001200900001-8
• Release Decision: RIPPUB
• Original Classification: R
• Document Page Count: 2
• Document Creation Date: November 9, 2016
• Document Release Date: March 1, 1999
• Sequence Number: 1
• Publication Date: December 7, 1953
• Content Type: REPORT

r
COUNTRY:
Approved For Release 1999/09/ Cgiylifilerkee2aff1200900001-8
Colombia
SUBJECT: Banker's Comments on Economic Developments
PLACE ACQOIRED:
(BY SORCE)
DATE ACQUIRED:
(BY SOURCE)
DATE (OF INFO): 27 Oct 53
tates, vtt
as amended,
unauthorized
25X1X6 prohibited.
C 29845
25X1A2g
MI=
DATE
Ci.e-c, 5-3
Supplement to:
Responsive to:
ontains information affecting the national defense of the United
of Title 18, Sections 793 and 794, of the U. S. Code,
Its transm s ion of its contents to or receipt by an
person is prohibited b c ion of this report is
1. In these days of swift changes on the economic front, no business engaged in foreign trade
can be run successfully without constant attention to reports from abroad. With this
fact in mind we have been issuing for several years our monthly reports, which we trust
have helped our friends analyze the economic situation of this country. With a view
to improve this report we have asked our branches throughout Colombia to conduct a
monthly survey and report to us. The material gathered in these investigations will
enable us to give you a better overall pict e of the situation in the different regions,
2. Although the maini points will be: treated in sufficient detail, stress will be laid upon
concreteness so that our readers can easily profit by this information without losing
meth time. Needless to pay, this report is prepared with the utmost care but we cannot
assume any responsibility for data contained therein.
3. TAX REFORM: In our last. report we mentioned that our Government had expressed its will-
ingneds to revise the tax reform. Meantime, decree No. 2317 of 8 September 1953 has
been modified and the outstanding amendments are: (1) Corporations may choose between
Articles 7 and 8 of this decree, which make dividends received by corporations and
capital invested by them in other corporations taxable, or a flat rate of ,% on the
dividends in which case capital in other corporations is not taxable; (2) The income
tax of 5% payable by partnerships has been reduced to 3%; (3) The rates for taxable
personal incomes have been shaved to sone extent for the lover and middle income groups
whereas the tax rates on large incomes remain the same as last year. The business
community generally agreed that most of the discussed points were modified substantially
thus lightening the tax burden created by the above mentioned decree. Likewise, finan-
cial circles welcomed a declaration of the President to the effect that the Government
will adequately control expenditures and a large part of the public revenue will be
spent on developmental projects which will bring social and economic benefits.
4. mg MARKET: The response by the stock market to the revision of the tax reform has
beiii-raiher poor so far, which in part is undoubtedly due to the fact that all corporate
dividends are now taxable income thus reducing the returns from the investments, at
least for those in the higher tax brackets. Investors seem to feel their way carefully
until trends are more firmly established.
OFFICIALS OXLY
SECURIT
him the USA of C
a
is igence components of
ted overseas without the con-
ice of
currence of the originating office through the
Collection and Dissemination, CIA.
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BU8XNESS EDITIONS; According to reports from our Branches retail sales have
ireI]ativeiy low levels all over the country. On the other hand, Wholesale
reported to be picking up as merchants are preparing for the Christmas trade.
here prevails an air of hopefulness that during the months to cote the pur-
r viii increase since the coffee harvesting is becoming general throughout
producing regions and consequently consumer spending is likely to rise.
6. ;ATTU, D.IIfG AND AGRICULTURE: The civil strife that beset the country for the last
years has prac ially come lo an end and internal peace and tranquility has been return-
ing. As a result many farmers and cattle breeders have gone back to their farts and
ranches they had to abandon because of the insecurity. The immediate effect was an in-
crease in prices of cattle since breeders had to complete their depleted herds. Another
consequence by which the economy is likely to benefit is the fact that the agricultural
production will increase substantially next year, thus probably producing a decline in
the cost of living. Incidentally, the agricultural outlook on the whole is favorable
for most staple crops such as coffee and tobacaa Vhieh are being harvested now in the
principal producing areas, and rice, cotton, beans and cora to be harvested in some
regions from December to February.
7. IT MARKET: Although the volume of coffee export business Is on the upgrade and
earnings from these exports have been at a huh level during this month, the
ey market continued to be very tight in spite of the slightly reduced bank reserve
requirements as demand for credit is running stronger than ever. There has been no
significant change in the geld and dollar holdings of the Bank of the Republic and the
circulating currency as will be seen from the following table:
15 Oct 1953
18 Sep 195
(Thousands omitted
19 Oct 1952
Currency in circulation
Col $541,284
544,944
412,049
Gold Reserve
Us $ 98,268
98,145
72, 'Q6
Beller Reserve
" 65,327
66,167
26,207
Special deposits abroad
" 2,221
3,274
6,892
Other deposits
" 10,000
10,000
Total Reserve Ratio
56.010
56.34%
42.34
a. pm= EEC AND WADE BALANCE: As a consequence of the movement of coffee, the
foreign exchange Wleit reporte& last month declined to about US$41 million on
17 October, after having risen to 140$84 million earlier this month. At the same time,
exports registered during this year had advanced to a record volume of DS$409 million
as compared with US$312 million during the same period of last year. Imports likewise
continued at a high level with licenses in the amount of OS$387 million registered un-
til the middle of October.
9. BIUNTERAL WADE /.51REENZNT BELGIUM: Through an exchange of notes on 2 October-,
this country entered into a new bilateral trade and payments agreement with Belgium
'whereby the Belgian-Luxemburgian Economic Onion will issue licenses for imports from
Colombia for at least Belgian francs 350 million (US$7 million) worth of green coffee
and 30 thousand metric tons of bananas. Colombia undertakes to authorize imports for
such commodities as not included in the list of prohibited imports. This authorisation
will include goods the importation of which is only permitted if they originate from
nations maintaining a more or less balanced trade with Colombia. The merchandise imported
by either party is not permitted to be reexported to third nations unless mutually agreed
upon through a prior exchange of notes. This agreement is valid for one year from the
2nd instant.
-end -
EDMNI
Approved For Release 1999/09/10 : CIA-RDP83-00423R001200900001-8