Geert Bekaert and Campbell R. Harvey's


Chronology of Economic, Political and Financial Events in Emerging Markets




Major Political and Economic Events




Deposit rates were market-determined. Mehrez and Kaufmann Liberalization date. a1


Beginning of Mexican debt crisis - impacts most of Latin America. 1982-1987, Central Bank intervened in 6 banks accounting for 25% of banking system assets. Causes: (1) loan concentration and fraud; (2) financial system liberalization without strengthening of regulatory and accounting framework as well as bank supervision; (3) deficient bank management; (4) overvaluation of currency, excessive private external borrowing, indebtedness and mismatched exchange risk; (5) sharp slowdown in growth. Overall change in macro policy: fiscal adjustment due to structural changes in fiscal policy; and sharp devaluation.a2


Drug traffickers assassinate the Minister of Justice. Government declares "war" on the drug families. Extradition of drug traffickers to U.S. authorized.a


Government signs truce with all but one of major guerilla groups.a


At midyear, Colombia enters into an informal agreement with IMF and World Bank to monitor economy.a


Colombia extradites four drug traffickers to the United States.a


Rebels attack the Palace of Justice, killing 100, including 9 judges and the President of the Supreme Court. At mid-month, volcanic eruptions, 20000 feared dead.a


The Exchange Office was empowered to authorize exchange licenses for settlement of the following financial transactions: interest and commissions charged by credit institutions; interest on supplier loans; interest and commissions on registered foreign borrowing or in respect of any other foreign financing operations authorized by the Monetary Board.a3(first entry)


Bank debt restructuring agreement.i


The Exchange Office was empowered to register loans to individuals if the loans met some requirements.a3


The Exchange Office of the Bank of the Republic was authorized to grant exchange licenses for advance payments of external debt.a3


The Exchange Office of the Bank of the Republic was authorized grant exchange licenses to credit establishments for the purpose of acquiring foreign exchange to increase their position in foreign exchange. The amount of foreign exchange for this purpose was limited to not more than 3% of the external liabilities of the institution.a3


The term for utilizing the system for repaying private external debt authorized by Monetary Board Resolution 33 of 1984 was extended to May 31, 1986.a3


The term for utilizing the system for repaying private external debt authorized by Monetary Board Resolution 33 of 1984 was extended to July 31, 1986.a3


The exchange office was given the authority to register external loans earmarked for working capital or direct investment in enterprises of the agricultural, industrial, or mining sectors, even in instances where the debtor is not engaged in producing exportable goods.a3


Foreign ownership can be 100% in some companies. Nationals can sell equity to foreigners. If applications for foreign investment are not answered in 45 days they are approved.a


Year of the Massacres (18,000 killings). Forward market for foreign exchange was made available for up to one year at Central Bank for hedging operations by firms operating abroad.a


Brady plan (adjustment packages that combined debt relief and market-oriented reforms)


Foreign participation of up to 49% in entities in the financial sector and majority participation in the institutions that receive support from the Guaranteed fund were permitted.a3


A new law permitting the establishment of foreign investment funds was promulgated. With the approval of the National Planning Board, shares of such funds may be placed in the stock exchange. Invested funds can be repatriated five years after registration with the Exchange Office.a3


The ceiling applicable to foreign currency deposits that domestic commercial banks and financial corporations could hold was increased to 15% from 8% of their total foreign exchange liabilities.a3


Papelcol (Pulp and Paper) privatized, $100 million.


Andean pact renewed (Bolivia, Colombia, Ecuador, Peru and Venezuela) (Chile refused).p


Congress passes law allowing the executive to implement sweeping changes.p Colombian government approved a wide ranging reform package that included: Elimination of the requirements that all foreign exchange be sold to the Central Bank, introduction of flexible tariff rates.u


The introduction of the Insider Trading Laws.a4


New foreign investment code, Resolution 49; foreigners same rights as domestic investors; remittances of up to 100% of most capital registered in the past year; equal access to local credit sources as well as to export incentives; 100% foreign ownership of financial institutions.


IFC Liberalization date.i


Bekaert/Harvey Official Liberalization date. [Final and NBER version].


Kim and Singal Liberalization date.


Gaviria administration presented its reform package.p


Bank debt restructuring agreement.i


Exchange rate system restructured.a


Buckberg Liberalization date.d


Peso deregulated. Floating rate is now used. Resolution 51 passed. Foreign country fund limited to 10% of ownership and foreign firms now permitted to remit 100% of profits.


Resolution 52 passed. Foreign country funds and investors are now allowed to purchase 100% of locally listed companies.


The requirement to maintain the investments made in mutual funds for at least one year was abolished. Colombian residents were allowed to hold foreign stocks and other portfolio investments abroad.a3


The minimum maturity on foreign loans contracted by private Colombian individuals or firms was reduced from 5 years to 1 year, and the limit on contractual interest rate was eliminated for the private sector.a3


First country fund, Colombian Investment Company SICAV launched in Luxemborg.aa


Corporacion Financiera del Valle ADR announced.aa


Corporacion Financiera del Valle ADR IPO date.aa


First exchange-traded overseas listing.a9


Government placed $125 million five year Eurobond marking the government's first re-entry into private bond market since debt crisis.i The Superintendencia de Valores introduced plans to integrate the three existing exchanges in the country.i


Standard and Poor's assigns rating of BBB- to sovereign debt.i


Moody's assigns first time rating of Ba1 to sovereign debt.i


The requirement that short-term foreign loans must carry a minimum maturity period of one year was abolished. Loans with maturities of less than 18 months were subject to a deposit requirement of 47%. Foreign exchange intermediaries were authorized to engage in lending operations denominated in foreign currency both domestically and abroad and in hedging operations.a3


New foreign exchange guidelines established. Domestic investors allowed to convert pesos without first converting to US$ to obtain short term loans abroad and to make hard currency loans to foreigners. Entities, currency futures/options permitted. The US dollars can be used internally. 


Pablo Escobar killed. 


The large capital inflows in the early 1990s led to the re-imposition of reserve requirements on foreign loans in 1993 after having been relaxed in 1991. a1


New deposit requirements on foreign borrowing, varying with each additional month of maturity, were introduced as follows: 140% for loans with maturities of up to 30 days; 127% for those with maturities of 6 months; 112% for those with maturities of 12 months; 100% for those with maturities of 18 months; 69% for those with maturities of 3 years; 43% for those with maturities of 5 years.a3


Tighter restrictions on domestic credit and foreign loans imposed.


Restrictions on foreign borrowing imposed.


ADR effective date. (Company=CEMENTOS DIAMANTE S.A., Exchange=PORTAL) a11


Inauguration of president coincides with the announcement of a four year social spending effort. Reinforced restrictions on foreign borrowing. ADR backed by property prohibited. Foreign funds required to be registered with central bank.


The remaining controls on interest rates were lifted. Mehrez and Kaufmann's second Liberalization date. a1


Eleven new investment funds registered to invest in Colombia.


The range of external debt prepayments subject to a deposit requirement was widened.a3


Parameters established regulating domestic companies that wish to issue stock on foreign exchanges.


The deposit requirement to change the external holder of a credit in cases of spinoffs, mergers, liquidations, or concordats of enterprises was eliminated.a3


A limit on the net foreign exchange position of financial intermediaries equal to 45% of net worth was established and a schedule was set up for phasing out the minimum required net foreign exchange position of 40% of the June 1991 level of liabilities by Jan.1, 1996.a3


The minimum required net foreign exchange position of banks and other financial institutions was eliminated.a3


Congress exonerated President of illegal actions.t


Foreign loans with maturities ranging from 1 days to 3 days were subject to a nonremunerated deposit requirement of 50% of the loan. Loans of over 6 months for imports are subject to a nonremunerated deposit requirement; these deposits are held for 18 months.a3


US announced negative assessment of Columbia's cooperation with anti-drug campaign.


The prior authorization requirement for FDI was eliminated. The authorization requirement for supplementary foreign investment, which was previously applied only to mining, was extended to other sectors.a3


New electronic trading system implemented.


New tax on fixed-income instruments established. The 7% tax provides increased incentives to hold equities. New tax regime also includes 1-8% tax on funds borrowed abroad and restrictions on total amount that the government can borrow abroad are put into effect.


Government decided against implementing a capital gains tax on stocks.


Congress approved tax increase to cover federal budget deficit.


The Clinton administration decided to freeze the assets of 11 Colombian companies and 46 individuals believed to be linked to the Cali drug cartel.


Chief Prosecutor Alfonso Valdivieso resigned his post to run for the 1998 presidential elections. A law that would lift the ban on the extradition of drug traffickers to the U.S. was approved.


President Ernesto Samper dismissed the commander of the armed forces, who had expressed disagreements over the government's peace agreements with leftist rebels.


Inflation for the 12 months ending June was 17.9%, the slowest annual rate in over ten years. Bank overnight rates fell .01% to 22.9 %.


Intensified opposition by the country's two principal guerrilla groups, FARC and ELN.


The U.S. gave Colombia permission to use anti-drug aid to fight Marxist guerrillas. 


The financial troubles in Asia's market, especially the collapse of Yamaichi Securities in Japan.


The merger between BIC bank and Banco Colombia.


Foreign investors sold Colombian equities to offset Asian portfolio losses. Interest rates are as high as 26%.


(Controls on credit operations) The nonremunerated deposit requirement for external financing was reduced to 25% of the loan, and the deposit period was shortened to 12 months from 18 months.a3


The U.S. upgraded its rating of Colombia for drug-fighting cooperation from "complete decertification" to "certification with a national interest waiver."


President Ernestor Samper's Liberal Party retained control of the national Congress in nationwide election.


The May31 presidential elections will proceed to run-off on June 21 because no candidate received the necessary majority to win.


Conservative Party nominee, Andres Pastrana, won the presidential election. The lending rates averaging 15%-the highest levels in 13 years.


Andres Pastrana was elected as the president in August.


Government announced it would allow the peso to devaluate at a faster rate on September 2.


(Controls on credit operations) The deposit requirement was further reduced to 10%, and the period to six months.a3


Moody's announced it placed  Colombia’ investment-grade rating under reviewInterest rates had reached their highest levels since 1983.


Two billion dollars in 1999 loan commitments from the World Bank and Inter-American Bank helped to ease pressure on the peso while interest rates showed signs of abating. The country is expected to grow more than 2% in both 1998 and 1999.


The Ministry of Finance indicated it would cut interest rates to 27% from 36% to revitalize the ailing Colombian economy and renew trading on the country’s three exchanges.


An earthquake devastated the nation’s coffee-growing region in the Colombian city of Armenia, leaving scores of dead, injured, or missing. 


(Provisions specific to commercial banks and other credit institutions) The limits for the open foreign exchange position were set at 20% and 5% of the net worth.a3


Benchmark 90-day interest rates fell to 25% from  37% in November, 1998.



The central bank devalued the peso by 9%. First quarter GDP declined 4.8%.


The central bank abandoned the defense of the peso band.


IMF approved $2.7 billion aid package.


President Andres Pastrana proposed reforms in the tax system and revenue sharing with the provinces to meet IMF requirements for an Extended Fund Facility.


Alleging corruption in Congress, President Pastrana proposed dissolution of the assembly and called for fresh elections and Congress responded by freezing discussions on economic reforms, leading to political crisis.


S&P downgraded Colombia's foreign currency debt.


The government abandoned the privatization of ETB, the Bogota municipal telephone company. The peso depreciated 10% during the quarter.


U.S. approved a package of $1.6 billion to fight drug trafficking. A new fiscal reform package was proposed to continue financial transactions tax, enlarge the tax base and reduce government staff.


The opposition Liberal Party's significant gains in the municipal elections further weakened the power of the president. Later the president appointed Juan Manuel Santos from the opposition Liberal Party as the finance minister.


A Senate committee approved government plans to limit revenue transfers to the provinces.


The government announced a US$350 million expenditure cut and a modified tax plan.


A new fiscal reform plan established the financial transactions tax as a permanent tax and increased the rate of the value-added tax. Inflation rate in 2000 fell to its lowest level since 1970, averaging 9.2% for the year.


President Pastrana announced the reopening of talks with the country's largest guerilla group.


Bavaria's announcement to buy back shares lifted the market. The peso appreciated.


The government pulled out of talks with the second-largest guerilla group. The Bogota, Medelin, and Cali Stock Exchange merged into one national body: the Bolsa de Valores de Colombia.


The markets surged due to the central bank's sixth interest rate cut of the year. The peso appreciated. Colombia ended 2001 with US$10.16 billion in international reserves, a record level for the country.


Pastrana accepts Farc ceasefire timetable and extends safe haven until April.


Pastrana breaks off three years of tortuous peace talks with Farc rebels, says hijacking of aircraft hours earlier is final straw. He orders rebels out of demilitarized zone. Government declares war zone in south after rebels step up attacks. b6


The Central Bank moved to a 50 basis point cut, bringing the rate down to 5.75%. The rate represents an all-time low for Colombia. b1


Independent candidate Alvaro Uribe wins a first-round presidential election victory, promises to crack down hard on rebel groups.


The government of President Alvaro Uribe has announced proposals for both labour and pension reform. The labour reform would increase holiday entitlement from 15 to 20 working days a year, but would eliminate overtime and public holidays, increase the legal retirement age from 55 to 58 for women and from 60 to 62 for men. b1


Moments before Alvaro Uribe is sworn in as president, suspected Farc explosions rock Bogota. Twenty people are killed. Days later, Uribe declares state of emergency. b6


IMF Announces US$2bn Stand-by Agreement.


The legislature approved major government initiatives, which included reforms to existing pensions, labor and tax laws. b21


The IMF confirmed that it is granting the Colombian authorities a new credit line, worth US$2.1bn.


The Colombian authorities have reported that they disposed of US$500m in 30-year bond. The paper carried a coupon of 634 basis points above US equivalents.


US special forces deploy in eastern province of Arauca to train Colombian troops, protect key oil pipeline.


Colombia's Constitutional Court has ruled to lift a state of emergency that had been used by the government of President Alvaro Uribe in its efforts to deal with illegal armed groups


The government of President Alvaro Uribe presented a democratic security plan that aims to put an end to Colombia's long-running internal conflict and in so doing implement measures to deal with related problems


The constitutional court ruled that the government's proposal to extend in 2005 value-added tax (VAT) at 2% to currently-exempt items was inadmissible.


14 out of 15 of President Uribe's planned austerity measures and political reforms rejected by voters in referendum. Three ministers, national police chief resign


Some 800 fighters from right-wing United Self-Defense Forces of Colombia (AUC) disarm. AUC says its 13,000 paramilitaries will disarm by end of 2005.


The Uribe administration issued a US$500m, 20-year bond at a spread of 369 basis points over the comparable US Treasury. All the funds raised are to be used for external debt servicing. b1


980 Colombian Paramilitaries Pledge Prompt Decommissioning. the United Self-Defense Forces of Colombia (AUC), agreed to demobilize its 13,000-strong forces by the end of 2005.


The Central Bank on 20 February approved a controversial plan to pay down Colombia's government debt from reserves. The government plans to draw on US$500m of reserves to pay down the most expensive debt of external public liabilities, totaling US$24bn. b1


Colombian Liberal Party refused to support re-election bid.


Farc's Ricardo Palmera, the most senior Colombian guerrilla ever captured, is jailed for 35 years.


The government stated that it would purchase US$100m-worth of foreign exchange reserves from the central bank. the peso make its biggest daily gain in over a year, jumping 1.7% against the dollar.



Regulations on Foreign Investors


Restrictions: 1. Non-residents can invest in the stock market directly or through a mutual fund with a local manager as the fund's legal representative. Foreign investment must be registered with the Central Bank. 2. Equal treatment of national and foreign investors. No foreign institutional investment fund may control more than 10% of the outstanding voting shares, or more than 40%, when the fund manager manages several foreign capital investment funds. 3. No foreign investment in sectors relating to national defense, real estate, and the processing and disposal of toxic waste not produced in Colombia. Investments in public services, in exploration & exploitation of natural resources, in financial institutions exceeding 10% of the subscribed stock, to be covered by protection, guarantees or insurance under international agreements ratified by Colombia, or through the institutional fund mechanism need pre-approval from the National Planning Department. 4. No restrictions on the repatriation of capital gains and dividends from registered investments. But repatriation of capital is not permitted within 1 year of initial investment.

Taxation: 8% dividend tax and 30% capital gain tax. 15% tax on dividends of oil and gas companies. Taxes are lower if investor's country has double taxation treaty with Colombia.a5(first entry)


Restrictions: No change.

Taxation: 7% dividend tax and 30% capital gain tax. 12% tax on dividends of oil and gas companies. Taxes are lower if investor's country has double taxation treaty with Colombia.a5


Restrictions: 1. Limits on acquisition of shares with voting rights by foreign investment funds were eliminated. And automatic authorization for these funds was established. 2. foreign investment in television network and programming companies increased to 40 percent

Taxation: no change


No change through 2001.a5


Restriction: 1. Permit 100 percent foreign ownership in most sectors of the Colombian economy, except in national defense and security, and toxic, hazardous, or radioactive products. 2. foreign investors may participate in privatization of state-owned enterprises without restrictions.

Taxation: corporate tax rate is 30%. b7


No change through 2003.


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No change through 2001.a5


Restriction: 1. Permit 100 percent foreign ownership in most sectors of the Colombian economy, except in national defense and security, and toxic, hazardous, or radioactive products. 2. foreign investors may participate in privatization of state-owned enterprises without restrictions.

Taxation: corporate tax rate is 30%. b7


No change through 2003.