Colombia Ramps Up Capital Controls

Aiming to stem further COP strength, Colombia has increased the non-refundable deposit amount required for foreign investors in the country to 50% from 40%, the ministry of finance says. At the same time, it has established a 2 year minimum permanence requirement for FDI entering the country, the ministry adds. The measures come days after the executive manager of the Colombian central bank, Gerardo Hernandez, advocated for a more flexible framework for foreigners to invest in the country. “This is a negative development inasmuch as it moves the current policy approach from what has been seen and recognized as investment-friendly further into the heterodox camp,” says Goldman Sachs. It adds that international experience shows that capital controls seldom work, and when they do the cost attached to them can be quite significant.