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IDB approves $101 million in concessional financing to support fiscal sustainability and educational reform in Bolivia

The Inter-American Development Bank today approved concessional financing for Bolivia totaling $101 million to support fiscal sustainability and the second stage of an educational reform program.

The lending operations approved by the Board of Executive Directors included a fast-disbursing loan for $63 million for a fiscal sustainability program, and $2.5 million for technical cooperation. A loan of $36 million will help consolidate education reform in the eight grades of basic education.

The loans from the Fund for Special Operations are for a 40-year term, with a 10-year grace period, with a 1 percent annual interest rate during the grace period and 2 percent thereafter.

Local counterpart funds total 2.2 million for the fiscal sustainability program and $5.2 million for educational reform.

Fiscal sustainability

The IDB financing for fiscal sustainability includes a $63 million fast disbursing loan to support measures in the areas of tax administration and pensions, a $2 million loan for technical cooperation and a $500,000 grant.

The program will focus in the areas of tax administration, pension policy, management programs to reduce pensions expenditure, and institutional reform of the pension system.

The government will place special emphasis on containment of expenditure in the public pension system, strengthening of pension management, and deepening reforms of tax administration.

Educational reform

An IDB loan of $36 million will help consolidate the educational reform process in the eight grades of basic compulsory education and deepen institutional transformations that have been underway in the education system since 1994.

The loan will help strengthen both central and decentralized management of the education system, particularly in municipalities and schools; complete the implementation of curricular reform in the eight grades of compulsory schooling; and raise the quality of initial teacher training.

The new operation gives continuity to the Educational Reform Program, a 15-year policy that has cut across several government administrations. The project was designed in the framework of the IDB's strategy for Bolivia focused on fighting poverty. The IDB supported the first phase of the program with an $80 million loan.

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