CAF approves financing for reviving the economy in Bolivia

The Andean Development Corporation (CAF) today approved a US$ 120 million loan for Bolivia intended to support the Program for Strengthening the Fiscal System and Improving the Quality of Public Spending being implemented by the Bolivian Government in pursuit of its objectives of reviving the economy, reducing poverty and achieving fiscal sustainability.

At an event held at the Corporation’s headquarters, the agreement was signed by Bolivia’s Finance Minister, Javier Cuevas, and the CAF’s Executive President, Enrique García, who specified that the fundamental purpose of this operation was to contribute to the strengthening of the Government’s capacity for fiscal management, particularly in optimizing public spending, through the development of instruments that would make it possible to increase society’s participation in the allocation of investment priorities, improving the process of following up and evaluating spending, and obtaining feedback on budget management.

In order to carry out the program, the country has the support of both the multilateral banks and international cooperation for financing around US$ 400 million. The funds approved by the CAF form part of the financing package in which the Inter-American Development Bank (IDB) and the World Bank are also participating. The World Bank has already approved a program of loans amounting to US$ 128 million, and it is estimated that the IDB will approve funds in the sum of US$ 131 million.

In the area of strengthening the fiscal system, the program incorporates policies aimed at improving tax administration by broadening the taxpayer base and reducing the informal economy with the purpose of increasing tax receipts. The program supported by the CAF also envisages formulating a national strategy for management in the medium term required by the fiscal cost of pension reform.