Financing for $62 million will strengthen the areas of income, liquid assets, and debt
Bolivia will strengthen fiscal sustainability of the public sector with $62 million in financing from the Inter-American Development Bank (IDB).
The project is the second operation of an IDB policy-based loan program for Bolivia in this area. The first operation, for $20 million, was approved in November 2010. These flexible loans provide resources to governments for financing priority programs. Disbursements are made after achieving objectives agreed upon by the IDB and the borrowing country.
The present operation is aimed at consolidating gains of the first operation by providing support to the central government for the review, adjustment, and regulation of the fiscal framework and implementation of improvements in central and subnational coordination mechanisms.
“The program will contribute decisively to the efforts of the Bolivian government to ensure the sustainability of a consolidated public sector and deepen the process of fiscal decentralization being carried out within the new constitutional framework,” said Ramiro López Ghio, specialist in fiscal and municipal development and IDB project team leader.
The program will also finance strengthening in the areas of income, liquid assets, and public debt both for the central government and for autonomous regions as defined in the constitution.
The Bolivian government expects that completion of the project will result in the following:
- Economic stability and fiscal balance.
- The design of a new regulatory framework for the distribution of taxes between levels of government that supports the generation of tax revenues at subnational levels.
- Development of a system that facilitates access to complete and relevant financial information for making fiscal policy decisions.
- Readjustment of the regulatory framework in terms of liquid assets and public debt.
The IDB financing consists of two loans: one from the Bank’s ordinary capital for $46.5 million for a term of 30 years with a grace period of six years and a fixed interest rate; and the second from the Bank’s Fund for Special Operations for $15.5 million for a term of 40 years with a grace period of 40 years and an annual interest rate of 0.25 percent.