On July 1999 Colombia entered into an extended facility agreement with the IMF. Clearly, problems currently affecting Colombia go well beyond economics, as political and social tensions have intensified. Many of the policies contemplated in the IMF program had already been addressed in the late 1980s and early 1990s. Indeed, during the final years of the Barco administration an economic reform program was initiated. This was intensified during the first two years of César Gaviria's presidency. The purpose of this paper is to analyze, from a political economy perspective, the launching of the Colombian market-oriented reforms in 1989-91. We are specially interested in investigating whether the so called "crisis hypothesis" applies to Colombia. This hypothesis is based on the observation made by a number of scholars, that a major economic crisis almost always precedes the launching of a reform effort. We argue that although Colombia was not facing a major economic crisis, it was facing a severe political and institutional breakdown. The profound attention devoted by key actors to political issues gave President Gaviria ample room to maneuver in the economic reform front. As a result, his first six months in office were truly remarkable in terms of economic reform. However, following the enactment of a new Constitution, interest groups negatively affected by the reforms were able to regroup, and started to actively lobby to stall the modernization process. As a result, the reformist effort slowed down significantly. Worse, many of the constitutional mandates placed Colombia on an unsustainable fiscal path