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The Inter-American Development Bank (IADB) has approved concessional financing for Bolivia totalling US$101mn to support fiscal sustainability and the second stage of an educational reform programme.

The lending operations approved by the board of executive directors included a fast-disbursing loan for US$63mn for a fiscal sustainability programme, and US$2.5mn for technical cooperation. A loan of US$36mn will help consolidate education reform in the eight grades of basic education.

The loans from the Fund for Special Operations are for a 40-year term, with a 10-year grace period, with a 1% annual interest rate during the grace period and 2% thereafter.

Local counterpart funds total 2.2mn for the fiscal sustainability programme and US$5.2mn for educational reform.

The IADB financing for fiscal sustainability includes a US$63mn fast disbursing loan to support measures in the areas of tax administration and pensions, a US$2mn loan for technical cooperation and a US$500,000 grant.

The programme will focus in the areas of tax administration, pension policy, management programmes to reduce pensions expenditure, and institutional reform of the pension system.

The government will place special emphasis on containment of expenditure in the public pension system, strengthening of pension management, and deepening reforms of tax administration.

An IADB loan of US$36mn will help consolidate the educational reform process in the eight grades of basic compulsory education and deepen institutional transformations that have been underway in the education system since 1994.

The loan will help strengthen both central and decentralised management of the education system, particularly in municipalities and schools; complete the implementation of curricular reform in the eight grades of compulsory schooling; and raise the quality of initial teacher training.

The new operation gives continuity to the Educational Reform Program, a 15-year policy that has cut across several government administrations. The project was designed in the framework of the IADB’s strategy for Bolivia focused on fighting poverty. The IADB supported the first phase of the program with an US$80mn loan.