821.51/2527
The Ambassador in Colombia ( Braden ) to the Secretary of State
[Received July 30.]
Sir: I have the honor to transmit herewith the original Spanish text and English translation, prepared by the Commercial Attaché to this Embassy of Decree No. 1388 of 1940 authorizing the settlement of the Colombian Government’s dollar bonded indebtedness.17
It will be noted that the decree contemplates the issuance of new bonds for the present ones which were issued under the loans of 1927 and 1928. The new bonds may not carry a rate of interest in excess of three percent per annum. Back interest will be paid in new bonds only up to the extent of fifty percent of the outstanding due but unpaid coupons, based on normal value. During the first five years, counting from 1941, an amount not greater than $1,800,000 may be allocated for interest and amortization of the new bonds. Beginning with the sixth year this amount may be increased but may not exceed $2,000,000. Any action under this authorization requires the prior favorable concept of the National Loan Committee.
Article 2 of the decree carries a saving clause which enables the government to postpone payments on interest coupons or to suspend temporarily amortization of the issue, if at any time after the conversion of the old bonds into new ones, economic or fiscal conditions prevent the government from promptly and completely servicing the new issue, but this action shall be limited solely to such time as such possibilities might exist. The prior authorization of the National Loan Committee is likewise a requisite to the utilization of this last mentioned authorization.
Inasmuch as the special powers conferred upon President Santos by Law 54 of 1939 expired at midnight July 19, 1940, and the present decree was dated July 17, 1940, its issuance was doubtlessly prompted by a desire to keep the special powers open insofar as the Foreign Debt was concerned, within the limitations established by the decree.
Respectfully yours,
- Translation not printed. For Spanish text, see Colombia, Diarlo Oflcial, July 23, 1940, p. 262.↩