Wednesday, February 15, 2006

Bolivia: 1.3 Billion in Bolivian Debt To Be Forgiven

According to President Evo Morales, Inter-American Development Bank is going ahead and forgiving Bolivia's 1.3 Billion dollars debt it holds. After the World Bank with 34 percent, it is the largest single creditor with 33 percent of Bolivia's 4.935 million foreign debt. 89 percent of this debt is held by the likes of the Interamerican Bank and the IMF, as this article states.

While Evo may get the headlines, credit for this goes to past Bolivian administrations who have spent years working on this, not to mention sacrifices borne by the population.

However much, the anti-globalization types yell and scream, the reality is that rational economic policies, (the Washington Consensus/Neo-Liberal bogeyman) have made this possible. First by disciplining the bloated government sector, by reducing it in size and scope, thus making it more manageable and transparent.

Privatization has also worked in areas besides the water and airline messes. State coffers gained with sale proceeds, and from taxation derived from these firms operations, one example is gas stations. And it goes without saying that corrupt officials are no longer able to siphon off money from state run firms.

Couple that with a sensible monetary policy, concentrating on fighting inflation, and you have the conditions for international organizations to be able to confidently wipe out debt and set conditions for new loans.

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