The Inter-American Development Bank today announced the approval of a $20 million soft loan to Bolivia to help finance the establishment of an integrated financial management system in 91 of the country’s 314 municipalities.
The program will also strengthen the national administration and the General Accounting Office so that the new system will be supported on a sustainable basis.
The start-up of the integrated financial management system, known as SIGMA, will advance institutional reform of national and subnational governments and will further the country’s decentralization process. It will form one of the basic pillars for a more efficient and transparent form of fiscal and administrative management and will correct serious management deficiencies in many municipalities.
The reform will allow municipalities to adopt long-range planning and provide them with tools for a more systematic form of financial management.
SIGMA also will encourage greater accountability in municipal management by promoting regular disclosure of information to the general public. A telecommunications network will link the country’s different administrative units to improve coordination and integration and the increased flow of information.
Several countries and international agencies are assisting the decentralization process, which is part of Bolivia’s Poverty Reduction Strategy.
The IDB program will support establishment of a SIGMA system in the 12 largest municipalities, which have populations greater than 50,000 and account for more than 50 percent of Bolivia’s total population. A simplified form of SIGMA will be implemented in 40 municipalities with populations of between 15,000 and 50,000 and in 39 municipalities with populations between 5,000 and 15,000.
During the 1990s the IDB provided Bolivia with four loans totaling $82 million to support earlier phases of the decentralization process.
The current IDB loan is for a 40-year term, with a 10-year grace period, at an annual interest rate of 1 percent during the grace period and 2 percent thereafter. The Finance Ministry will be in charge of carrying out the project*. Local counterpart funds total $5 million.