Colombia on Wednesday lifted
foreign capital restrictions on local bonds and sought to speed
up financing for the next three years to defend its economy as
world markets get battered by the global financial crisis.
President Alvaro Uribe said his government would lift
restrictions on short-term foreign capital in peso-denominated
TES bonds and also try to secure financing for 2009, 2010 and
2011 with the help of the IMF and the World Bank.
“This global economic crisis is a great concern … the
threat to loss of liquidity, the threat to sources of
financing, that banks say no to loans,” Uribe told reporters
during a news conference at the presidential palace.
Uribe, who had earlier confirmed the end to the capital
limits to Reuters, said his government would also declare an
amnesty for repatriated undeclared capital as long as it was
not tied to drug trafficking or criminal activity.
Colombia, an exporter of oil, coffee, nickel and coal,
earlier this year imposed restrictions such as a special
deposit requirement on portfolio capital to curb the soaring
peso <COP=RR> currency. But it lifted restrictions on equity
investments in September.
Colombia’s stock market lost 3.22 percent and the peso
currency closed down 1.23 percent on Wednesday at 2,311 versus
the dollar at its weakest in the last two years, following the
trend across the region.
The World Bank said on Wednesday Latin America is
struggling with a “perfect storm” caused by the financial
crisis, slowing economic growth and a fall in commodity
prices.
Central banks across the world cut their interest rates in
unison on Wednesday but that move failed to stop stock markets
taking a beating, loosen credits or ease gloomy forecasts for a
sharp economic global downturn.
Colombia expects economic growth of around 4 percent this
year after its economy soared more than 7 percent last year.
Uribe wants the central bank to lower interest rates to foster
economic growth, but most of the bank’s board has resisted.