* Foreign participation in TES market is about 4.5 pct
* Gov't hopes tax clarification will boost foreign interest
* Official hopes Colombia reaches levels closer to Peru,
By Helen Murphy and Nelson Bocanegra
BOGOTA, May 23 Colombia hopes to attract more
foreign money to its local bond market when it clarifies the
text of a recent tax reform that investors have criticized as
over-complicated, the head of the government's public credit
Congress approved an overhaul of the tax code last year that
reduced duties on foreign portfolio investment to 14 percent
from 33 percent. Some players have said the wording on
withholding tax remains too hard to interpret, discouraging them
from increasing their presence in the Treasury bond, or TES,
International participation in the TES market has almost
doubled to near 4.5 percent in the last 18 months, and some
tweaking of the tax reform wording may help increase that
further, Michel Janna told the Reuters Latin America Investment
Summit on Wednesday.
The clarifications, which likely will be ready within a
month, may allow the government to attract additional foreign
participation in the TES market and lift it closer to levels
seen in Peru and Mexico, of about 15 percent, he said.
"What we see clearly is that when we compare participation
of foreigners in Colombia's TES market with what happens in
other countries like Mexico or Peru, we are below," Janna said
in an interview at his Bogota office.
"Eventually, we believe that with modifications, we could
reach levels similar to our peers."
Some 157 trillion pesos ($85 billion) worth of TES was in
circulation during the year through May 3.
Janna, who joined the finance ministry from investment bank
Goldman Sachs in February, said the government's strategy is to
be "boring" as far as fiscal risk is concerned and allow
investors to see what is on the cards over the long term.
"We have a strategy of debt issuance that seeks to be
predictable, transparent and boring, and where clearly we are
specifying over the next 30 years which securities we are going
to issue, when we are going to reopen certain bonds and where we
want to be in terms of the fiscal deficit."
The government may reopen an existing global bond for the
remaining $600 million it has earmarked in its financing plan
for this year, said Janna.
Once an investment outcast where investors feared their cash
could be swallowed up by banking crises, Colombia is now
attracting record foreign investment into industries and capital
Decent economic growth and security advances against Marxist
rebels and criminal groups have helped the country clinch three
investment grade credit ratings from major Wall Street agencies.
Janna will participate in routine meetings with credit
rating agency Moody's in the coming days to go over the nation's
financial books. He hopes to convince it to increase its credit
rating a notch to BAA2 this year.
Last month, the government rolled out a series of measures
to help bolster economic growth and businesses which have
struggled with a strong currency.
The plan, known as PIPE, has boosted the likelihood
Colombia's economy will grow between 4.5 percent and 4.7 percent
this year, said Janna, just shy of the 4.8 percent potential
sought by Finance Minister Mauricio Cardenas.
"The government doesn't have a specific goal, it has a range
and basically 4.5 percent is the number we can be comfortable
with. We'd like to grow at 4.8 percent and the potential of the
economy is 4.8 percent."