MSG048G/01E BOLIVIA-FINANCE: IMF Lends 147 Million for Economic Reforms

• by IPS Correspondents (washington)
• Tuesday, December 20, 1994
• Inter Press Service

WASHINGTON, Dic 20 (IPS) - The International Monetary Fund (IMF) on Monday approved loans of 147 million dollars to assist Bolivia carry out economic reforms.

The loans, to be given over three years, fall under the Extended Fund for Structural Adjustment, which is used to grant credits to eligible countries to enable them to improve their balance of payments and increase economic growth.

The terms for this type of loans include a ten year payment schedule with a five and one half years grace period, at 0.5 percent annual interest.

Bolivia began to restructure its economy in 1985, in an attempt to control inflation, increase exports and growth, and diminish poverty.

However, IMF spokespersons said poverty remains high with only a gradual recovery, and the economy is still vulnerable to negative foreign factors.

The Bolivian government is estimating a growth rate of four percent for 1994 and between 5.5 and 6 percent for 1995, with a drop in the 7.5 percent inflation for 1994 to five percent within the next three years.

As a result of this, the budget deficit is expected to increase from the 3.3 percent of the Gross Domestic Product (GDP) in 1994 to 4.4 percent in 1995, in order to absorb the initial costs of the restructuring.

The government blames slow growth on low levels of local investment, and will thus attempt to increase the amount of funds in accounts from the current 14 percent of the GDP to 18 percent, as well as privatise the petroleum, electricity, telecommunications, railroad, airlines and metal refining industries.

In addition, President Gonzalo Sanchez de Lozada is calling for reforms to the education, social security, civil service and judicial systems to compliment the economic changes.

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