Document Type: 
Document Number (FOIA) /ESDN (CREST): 
Release Decision: 
Original Classification: 
Document Page Count: 
Document Creation Date: 
November 9, 2016
Document Release Date: 
March 1, 1999
Sequence Number: 
Case Number: 
Publication Date: 
December 7, 1953
Content Type: 
PDF icon CIA-RDP83-00423R001200900001-8.pdf315.94 KB
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. Approved For Release 1999/09/10 : CIA-RDP83-00423R001200900001-8 flETURN TO CIA LIBRARY 'Approved For Release 1999/09/10 : CIA-RDP83-00423R001200900001-8 - 2 - 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