Bolivian foreign debt reduced by US$52.8 million

The Andean Development Corporation (CAF) and the government of Bolivia signed an agreement to reduce the country’s multilateral foreign debt by a total of US$52.8 million at net present value. The operation falls within the framework of the expanded debt reduction initiative for Heavily Indebted Poor Countries (HIPC). The CAF has already participated in the first stage of the HIPC providing relief of US$39 million on the Bolivian foreign debt.

The documents were signed by the finance minister, Jacques Trigo, and the CAF representative in Bolivia, José Vicente Maldonado. The purpose of the HIPC debt initiative is to make the impact of the debt on the balance of payments of beneficiary countries more sustainable, reduce the vulnerability of their economies to external shocks, and increase the resources available to speed up reforms and put through social programs.

With the relief approved by the multilateral lender, Bolivia will be able to release funds to strengthen its social programs, especially the Poverty Reduction Strategy put in place by the Bolivian government after consultations with civil society, the CAF spokesman explained.

José Vicente Maldonado said the operation was important because it is a significant effort to benefit Bolivia by an essentially Latin American institution formed by developing countries. Unlike other multilateral organizations that participate in the HIPC initiative, the CAF does not have donor countries among its shareholders.

As a result, the CAF depends on its own financial strength based on prudent financial policies designed to maintain an investment grade rating that gives direct access to international capital markets through which the institution is able to provide competitive financial services to the public and private sectors of its member countries.

As a multilateral development bank and within its financial and political limitations, the CAF is contributing with this operation to Bolivia's efforts to achieve a large reduction of its foreign debt burden.

The Andean Development Corporation is making a significant contribution to Bolivia’s efforts to achieve sustainable growth through operations aimed at developing physical infrastructure, strengthening the private sector and financial system and executing programs that promote equity and human development, which are also the objectives of the non-reimbursable technical cooperation operations.