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Bolivia: Second Annual Arrangement Under Three-Year Arrangement Under the Poverty Reduction and Gsc rowth Facility

Author(s):
International Monetary Fund
Published Date:
March 2000
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Bolivia: Second Annual Arrangement Under Three-Year Arrangement Under the Poverty Reduction and Growth Facility

Attached here to* is a letter (the letter), with an annexed Memorandum of Economic Policies and tables (the Memorandum), dated December 20,1999 from the Minister of Finance and the President of the Central Bank of Bolivia requesting from the International Monetary Fund as Trustee (the Trustee) of the Poverty Reduction and Growth Facility Trust (PRGF Trust) the second annual arrangement under the three-year arrangement for Bolivia under the Poverty Reduction and Growth Facility (PRGF) approved on September 18,1998, and setting forth the objectives and policies of the program to be supported by the second annual arrangement.

To support these objectives and policies, the Trustee approves the second annual arrangement in accordance with the following provisions, and subject to the provisions applying to assistance under the PRGF Trust.

1. The amount of the second annual arrangement will be for the equivalent of SDR 33.653 million made available in three loans:

  • (i) the first loan, in an amount equivalent to SDR 11.21 million, will be available on the first availability date after approval of this arrangement at the request of Bolivia;
  • (ii) the second loan, in an amount equivalent to SDR 11.21 million, will be available on May 15, 2000 at the request of Bolivia and subject to paragraph 2 below; and
  • (iii) the third loan, in an amount equivalent to SDR 11.233 million, will be made available on November 15, 2000.

2. Bolivia will not request disbursement of the second and third loans specified in paragraph l(ii) and l(iii) above:

  • (a) if the Managing Director of the Trustee finds that the data as of March 31,2000, with respect to the second loan, and as of September 30, 2000, with respect to the third loan, indicate that:
    • (i) the limits on the cumulative deficit of the combined public sector and the cumulative domestic financing of the combined public sector specified in Table 1 attached to the Memorandum; or
    • (ii) the target for the minimum gain of the net international reserves of the Central Bank of Bolivia specified in Table 4 attached to the Memorandum; or
    • (iii) the limit on the changes in net domestic assets of the Central Bank of Bolivia specified in Table 5 attached to the Memorandum; or
    • (iv) the limits on the increase of public and publicly guaranteed external debt specified in Table 7 of the attached Memorandum, was not observed; or
  • (b) if Bolivia has not carried out its intentions with regard to the structural performance criteria relating to the submission to Congress of draft amendments to the tax code strengthening the tax authorities’ to enforce tax laws, and draft legislation to reform the tax system as specified in paragraphs 12 and 20 of the Memorandum, respectively; or
  • (c) if Bolivia:
    • (i) has imposed or intensified restrictions on payments and transfers for current international transactions; or
    • (ii) has introduced of modified multiple currency practices; or
    • (iii) has concluded bilateral payments agreements which are inconsistent with Article VIII; or
    • (iv) has imposed or intensified import restrictions for balance of payments reasons; or
    • (v) has incurred any new external payments arrears by the public sector; or
  • (d) with respect to the second loan, until the Trustee has determined that the first review of Bolivia’s program referred to in paragraph 2 of the letter has been completed; or
  • (e) with respect to the third loan, until the Trustee has determined that the second review of Bolivia’s program referred to in paragraph 2 of the letter has been completed.

If the Managing Director of the Trustee finds that any of the performance clauses that have been established in or under this paragraph 2 has not been met with respect to the second or third loan specified in paragraphs l(ii) and l(iii) above, such loan may be made available only after consultation has taken place between the Trustee and Bolivia, and understandings have been reached regarding the circumstances in which Bolivia may request that second or third loan.

3. Before approving the third annual arrangement, the Trustee will appraise the progress of Bolivia in implementing the policies and reaching the objectives of the program supported by the second annual arrangement, taking into account primarily:

  • (a) the indicators and structural benchmarks specified in Tables 1,2,4,5,6 and 7 to the memorandum;
  • (b) imposition or intensification of restrictions on payments and transfers for current international transactions;
  • (c) introduction or modification of multiple currency practices;
  • (d) conclusion of bilateral payments agreements which are inconsistent with Article VIII;
  • (e) imposition or intensification of import restrictions for balance of payments reasons;
  • (f) incurrence of any external payments arrears by the public sector.

4. In accordance with paragraph 2 of the attached letter, during the period of the second annual arrangement, Bolivia will consult with the Trustee on the adoption of any measures that may be appropriate at the initiative of the Government or whenever the Managing Director of the Trustee requests such a consultation. Moreover, after the period of the second annual arrangement and while Bolivia has outstanding financial obligations to the Trustee arising from loans under that arrangement, Bolivia will consult with the Trustee from time to time, at the initiative of the Government or whenever the Managing Director of the Trustee requests consultation on Bolivia’s economic and financial policies. These consultations may include correspondence and visits of officials of the Fund to Bolivia or of representatives of Bolivia to the Fund.

*See EBS/99/235 (12/22/99)

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