821.51/7–2549
The Ambassador in Colombia ( Beaulac ) to the Secretary of State
No. 479
Sir: I have the honor to report that during a conversation that I had with President Mariano Ospina Perez on July 22, the President [Page 610] expressed regret that Colombia had been unable so far to obtain any loans in the United States except for the Export-Import loan of ten million dollars,1 five million dollars of which had been utilized.
The President referred with pride to the economic and financial record of his Government. He said that if it had not been for April 9 of last year, Colombia would have the best record of any Latin American country so far as keeping down inflation, balancing its budget, and limiting increases in currency circulation were concerned. He said that the amounts of money desired by Colombia were small and he could not understand why the Export-Import Bank, for example, was so hesitant to lend Colombia a few million dollars.
The President painted an especially rosy picture of living conditions in Colombia. He said that meat was cheaper in Colombia than in any other country on the continent. I agreed that meat was cheap but told him that everything else was expensive and that I still did not understand how ordinary people lived in Colombia. I said that I had just returned from the United States and was appalled at the prices Colombians had to pay for merchandise, especially in the light of the enormous difference in wages between Colombian and American workers.
The President indicated that he thought this was a passing phase in the development of Colombia’s economy and that with increased production, which was already evident, prices would decline.
I reminded the President that Colombia’s relative prosperity was due in large measure to the prices that Colombia was receiving for coffee in the United States, which continued at high levels. I said I thought there was every reason why Colombia’s economy should be in excellent condition. Its credit, however, was being damaged by the complex controls that existed and particularly by the uncertainty concerning what controls might be instituted tomorrow. I said that the Government’s failure to permit foreign capital to transfer dividends promptly and to re-export capital was discouraging the investment of new dollars in Colombia. I said that before I had left for the United States I had had the opportunity to see a draft of a law or regulation prepared by the Exchange Control officials which would improve conditions in this respect, but that I had been disappointed, upon returning to Bogotá, to learn that little progress had been made in placing the new regulation in effect.
The President said that the Government was still studying the matter, that it was now inclined to believe that it should submit the draft, when approved, to Congress, but that if the Congress failed to take action, the Government itself would issue a decree in the matter.
[Page 611]The President referred to Colombia’s success in achieving a balance in her international payments through drastic restrictions on imports. I said that I had been informed that as of June 30 this balance had been achieved partly by withholding exchange in the amount of some forty million dollars to importers of merchandise who had been issued reimbursable import licenses by the Government. The President said that he was sure that the situation did not exist today. (Banking sources have informed the Embassy that, as of July 21, overdue commercial payments total forty-two million dollars. Of this amount fifteen million dollars have been approved but not yet released. In addition, American firms in Colombia have requested dollars in an undetermined amount for transfer of dividends, profits and royalties. Some of these requests have been pending for as long as two years.2)
With reference to the dollar shortage, to which the President had referred, I asked the President whether he thought the so-called “dollar shortage” would ever be overcome while the peso continued to be over-valued in terms of the dollar. The President said that he himself remained opposed to the devaluation of the peso but that other people had different ideas, and it was up to the Congress to make its own decision on that point.
Respectfully yours,
- The agreement between Colombia and the Export-Import Bank establishing this line of credit had been signed on August 12, 1948.↩
- In telegram 419, August 5, from Bogotá (not printed), Ambassador Beaulac reported that the commercial payments “in arrears” had been reduced as of August 2 to a figure of US$21,270,494 (821.5151/8–549).↩