Colombia revokes decree capping pension funds' foreign investments

Colombia's ​newly inaugurated government revoked ‌a decree ​that capped foreign investments by private pension funds at 30%, Finance Minister Miguel Gomez ‌said on Wednesday.

The previous decree, issued last April by the administration of former President Gustavo Petro, aimed to force pension funds to repatriate capital ‌to boost investment in domestic infrastructure and economic projects. "By removing this ‌restriction, funds will be able to better diversify their portfolios, access more markets, and seek higher returns," Gomez said in a recorded message.

Industry association Asofondos said ⁠Colombia's ​private fund managers, ⁠which include Porvenir, Proteccion, Colfondos, and Old Mutual, manage a combined portfolio of approximately ⁠579 trillion pesos ($179 billion) on behalf of nearly 20 million members. The previous rule ​required the gradual repatriation of more than 100 trillion pesos ($30.9 ⁠billion) to the Colombian economy, according to Asofondos. Foreign investments currently account for approximately ⁠48% ​of funds' total portfolio, equivalent to nearly 278 trillion pesos ($85.8 billion).

The previous decree risked triggering a sharp appreciation of the peso ⁠against the dollar and artificially driving up domestic asset prices. "We are correcting ⁠this policy ⁠before it takes effect and has any material impact," Gomez added.

($1 = 3,240.5500 Colombian pesos)