IMF TO GIVE COLOMBIA $2B IN AID

WASHINGTON (AP) -- Colombia and the International Monetary Fund reached
agreement Friday night on a three-year aid package worth between $2 billion
and $3 billion, Finance Minister Juan Camilo Restrepo said.

After a meeting with IMF Managing Director Michel Camdessus, Restrepo said
that details would be announced Monday at a news conference.

A statement from the IMF said the two sides had "reached understanding on
all the key elements and policies that would support Colombia's economic
program for 2000-2002."

However, the IMF statement did not mention any amount for the aid package.

"IMF management believes that Colombia's program would help the country
return to the path of sustainable economic growth while continuing to make
progress on reducing inflation, restoring balance in its external accounts
and strengthening the social safety net," the IMF statement said.

Colombia is suffering through its worst recession since the 1930s. The
Colombian peso has lost 22 percent of its value against the dollar so far
this year.

The loan is expected to calm Colombia's turbulent foreign exchange market,
which is controlled by a crawling foreign exchange trading band.

Restrepo said Colombia alone would make the decision about the future of the
trading band. Other Colombian officials have said in recent days it would be
continued.

The IMF board is expected to meet in mid October to approve the aid package.

Restrepo said the accord is a general aid agreement, similar to agreements
the IMF has signed with Mexico, Argentina and Brazil in recent years.

The agreement lays out "how the Colombian economy will perform in terms of
growth, in terms of external policy, in terms of fiscal policy," he said.

If the agreement is similar to other IMF accords, then Colombia would likely
be obliged to reduce its budget deficit considerably with an austerity plan.
That would mean less in government transfers for municipalities already
unable to provide many basic services, a restructuring of a health care
system that can't pay its bills and a broadening of the tax base in a
country with widespread tax evasion.

A strict austerity plan also could trigger labor unrest. Unions called a
two-day general strike in August to protest anticipated belt-tightening
measures.

Colombian President Andres Pastrana visited Washington earlier this week
seeking $3.5 billion in aid from international sources -- mainly the United
States -- for a three-year plan to combat the drug trade, fortify the legal
system and rescue endangered social programs.

He said Wednesday he had received "big support" from President Clinton for
his plan.