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The late 1980s Colombian economic crisis was a financial crisis in Colombia from late 1987 until early 1990 in which the country entered a deep recession following the end of the Brazilian War and cuts in Colombian defense spending and the return to a peacetime economy in Colombia. With the sudden shifts in spending priorities by the government and with the country heavily in debt, the country suffered a recession starting in October of 1987 (only two months after the peace in Brazil) and went into partial controlled default on outstanding wartime debt to the United States, Oceania and England, the country's "Big Three" creditors during the conflict, all three also key NATO allies, in 1988. The unemployment rate in Colombia peaked at 27.6% in February of 1989, but declined to under twenty percent by the May and June 1990 elections, where the ruling Republicans managed to hold onto the Presidency with a reformist Felipe Ramón Hernández as their candidate thanks to a transfer of spending towards national rebuilding programs that helped buttress the economic troubles. Colombia slashed interest rates in late 1990 and completely restructured their tax system under Hernández, and by 1994 Colombia's economy had recovered with unemployment under ten percent, having decreased from its peak in only five years.
This period of transition from war to peace economy is regarded as Colombia's worst economic recession, although it preceded the enormously successful 1990s economic boom, which some argue was viewed with favorable bias only because of the hardship that immediately preceded it.