Wednesday, February 13, 2008

Bolivia and World Bank Agree to Funding Package

Washington D.C. - The Bolivian government entered into a $77.5 million loan agreement with the World Bank to fund five major projects in the areas of rural investment, agricultural development, education and natural disaster prevention.




Bolivia’s Ambassador to the United States, Gustavo Guzman, and Carlos Felipe Jaramillo, Director of the World Bank for Bolivia, Ecuador, Peru and Venezuela - signed the loan agreement on Monday at the headquarters of the World Bank in Washington D.C.

Ambassador Guzman noted that this is the first World Bank loan package to Bolivia since Evo Morales assumed the presidency in January 2006.

International financial institutions such as the World Bank and International Monetary Fund (IMF) have drawn considerable public criticism from Morales in the past.

In May 2007, Bolivia became the first country in the world to withdraw from the World Bank’s International Center for Settlement of Investment Disputes (ICSID). The arbitration court is known for its lack of transparency and bias towards multi-national companies. Morales allowed Bolivia's agreement of understanding with the IMF to expire in March 2006.

To counteract the influence of the World Bank, IMF and Inter-American Development Bank, President Morales and other Latin American leaders have made participation in regional economic integration activities, such as the Bank of the South, a priority.

The IMF and World Bank are considered the primary lending agencies that pressured the Bolivian government to accept neoliberal policies during the presidency of Gonzalo Sanchez de Lozada in the mid-1990s. Privatization of Bolivia’s industries increased unemployment and poverty instead of creating jobs and national prosperity as suggested by policymakers.

A World Bank sponsored project - administered by Bechtel’s Aguas del Tunari - to privatize water in Cochabamba led to the Water Wars of 2000. Mobilization around the right to water eventually led to Aguas del Tunari's removal from Bolivia. It propelled the nation’s indigenous population to consolidate its political power and made Bolivia an international inspiration in the anti-globalization movement.

Despite this history, the Morales government agreed to a five loan package from the World Bank that according to Ambassador Guzman, “is based on a dialogue grounded in the country’s development priorities as defined in the National Development Plan of President Evo Morales’ administration.”

The agreement includes the following low-interest loans: $20 million for the Second Participatory Rural Investment Project; $20 million for the Lake Titicaca Local Sustainable Development Project; $15 million for the Land for Agricultural Development Project; $10 million for the Municipality of La Paz Secondary Education Transformation Project; and $12.5 million for the Prevention and Management of Natural Disasters Project.

Ambassador Guzman emphasized the importance of the loan package to deal with natural disasters.

The project will be used to improve the government’s capacity to prevent and respond to natural disasters, as well as the reconstruction of housing, health facilities and schools. Preventive measures such as irrigation systems and the construction of dykes along riverbanks are also expected to be funded by the project.

On Tuesday, President Morales declared a national state of emergency due to heavy rains that have flooded much of the northeastern lowland regions of the country. Since November, heavy rains have fallen and resulted in the displacement of 43,000 individuals and more than 50 deaths.

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