LA PAZ, Bolivia -- The World Bank and the International Monetary Fund have pledged a total of $250 million in new loans for Bolivia to help the government's plan for economic recovery, a cabinet minister said Thursday.
Planning Minister Gonzalo Sanchez de Lozada told UPI the loans would guarantee the stability of Bolivia's currency despite labor unrest and a jump in inflation.
The IMF pledged $180 million and the World Bank $70 million to Bolivia following 19 days of talks in Washington this month, he said.
Bolivia, with a foreign debt of $4.3 billion, is the second poorest nation in the Western Hemisphere after Haiti.
The IMF loan to Bolivia will be extended over a period of three years and will be repaid over 10 years, Sanchez de Lozada added.
It is the fourth IMF loan to Bolivia under the center-right government of President Victor Paz Estenssoro, 80, who took office in August 1985 for his fourth non-consecutive term.
The IMF board is scheduled to approve the pledged loan in July, and will make a first $30-million disbursement to cover the first half of the year. Five other $30-million disbursements will be made every six months throughout 1990, Sanchez de Lozada said.
The loans will help Bolivia cope with a balance of payments deficit and dwindling cash reserves at the Central Bank, he said.
Bolivia's Central Bank said, in a May 18 report, that its reserves amounted to $162.6 million, with only $58.5 million in available capital.
Bolivia's agreement with the World Bank is to be signed July 16 and will cover a $70-million loan for working capital to businesses indebted to private banks, he said.
Twenty percent of outstanding loans by private banks to businesses are in arrears, draining the private financial system unable to extend new loans, private bank spokesman David Blanco said.
The World Bank loan will be disbursed through Dec. 31 and is repayable over 30 years, Sanchez de Lozada said.
Bolivia also obtained a pledge from Washington for 150,000 tons of wheat worth $20 million, he said. The La Paz government will sell the grain and use the proceeds as collatoral funds to obtain other foreign loans, he said.
Paz Estenssoro, a former revolutionary turned conservative, introduced an economic austerity program when he returned to office in 1985. He managed to bring the inflation down from an annual 23,000 percent to 10.7 percent in 1987.
A free-market oriented program brought about 2.1 percent growth in 1987, the first year of expansion since 1982.
But gasoline price hikes triggered street protests in April and pushed inflation up 4 percent in one month alone. Labor sectors are demanding wage increases. Unemployment stands at 20 percent.
More than 10,000 workers and students joined a hunger strike called by the powerful Bolivian Workers Central that was lifted May 7 two days before Pope John Paul II arrived in the nation for a five-day visit.