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Public Finance and Development in Colombia*
Published online by Cambridge University Press: 02 January 2018
Extract
Colombia is a country of paradoxes. Because of the high culture of its ruling classes, Bogotá is called the “Athens of Latin America,” yet over one-third of the population is illiterate. The country is unusually well-endowed with natural resources, has a relatively large land area and a population of 15.6 million, but the per capita income is only the eighth highest in Latin America. Colombia is relatively underpopulated, with the same population as the Netherlands and 35 times its area, but there are millions of landless campesinos. Living in Bogotá, and walking the paths of the wealthy, it is difficult for a foreigner (and also for many Bogotanians) to believe that most Colombians are desperately poor. This is because Bogotá and the other main cities are like islands in a sea of poverty.
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- Research Article
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- Copyright
- Copyright © University of Miami 1966
Footnotes
*
The authors were Director and Senior Economist respectively of a recent fiscal mission to the Republic of Colombia under the auspices of the Joint Tax Program of the Organization of American States and the Inter-American Development Bank. Other staff members contributing to the research were Jorge Franco Holguín, Álvaro López Toro, Bernardo Rueda Osorio, Eduardo Wiesner Durán, and Richard C. Williams. This article represents the views of its authors and not necessarily those of the sponsoring agencies.
References
1 All amounts expressed in value and prefixed by “$” refer to Colombian pesos. During 1963 the official rate of exchange was $9.00 per U.S. dollar and the free market rate was approximately $10.00 per U.S. dollar.
2 Informe Financiero de la Contráloria General, 1962, pp. 354-56.
3 Law 21 of August 20, 1963, which imposed a 20 per cent surtax applicable to the income and complementary tax liabilities for 1962 and 1963, will increase the yields of these taxes substantially but only for a two-year period. The first impact of this surtax was experienced in the fourth quarter of 1963, when the yield of the income and complementary taxes increased by about $200 million.
4 Law 21 of August 20, 1963.
5 As part of the devaluation of December, 1962, Colombia adopted an exchange rate differential on coffee and petroleum export earnings. Under this system, exporters are required to sell their foreign exchange earnings for $7.10 per U.S. dollar, while the government realizes a profit by selling the earnings for $9.00 per U.S. dollar. During 1963, this “tax” increased government revenues by $469.3 million.
6 On an accrual accounting basis, the deficits were even greater, totalling $3,814.2 million for the period from 1950 to 1962, and $1,236.7 million in 1962.