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Last Updated:  Thursday, 3 April, 2003, 17:00 GMT 18:00 UK
IMF grants loan to Bolivia
Bolivia's centre-right president Gonzalo Sanchez de Lozada
Sanchez de Lozada's government is under pressure
The International Monetary Fund (IMF) has lent Bolivia $118m (75m) and backed off austerity demands which provoked violent anti-government protests.

The money will be welcomed by the government of centre-right president Gonzalo Sanchez de Lozada, which is reportedly on the verge of collapse.

Mr Sanchez de Lozada does not control Bolivia's congress - a fifth of which is made up of a left-wing indigenous party which blocks his every move - and the economy is into its fifth year of recession.

The IMF money comes after Mr Sanchez de Lozada - who has the lowest opinion poll rating of any South American leader - asked for and received a $10m loan from the US last week.

The president has close ties with the US, which promised him $150m for a drug eradication programme when he was elected.

Gun battle

In February, 33 people died and 200 were injured when striking police officers, protesting against payroll tax increases, and the country's armed forces exchanged gunfire in the capital La Paz.

Mr Sanchez de Lozada was forced to flee the presidential palace and later appeared on national television to suspend the tax rise.

The tax rises were part of an IMF programme to reduce Bolivia's budget.

The new one-year loan requires the government to cut its budget deficit to 6.5%, instead of the original 5.5%, from the current 8.75% and does not require an increase in payroll tax.

In turn, Bolivia has agreed to cut the deficit to 3.5% by 2005, broaden the base of some taxes, reduce the government payroll and cut costs in the pension system.

The IMF has offered further cash if the government comes up with a new economic plan to cut its deficit.




SEE ALSO:
Bolivia shuffles government
20 Feb 03  |  Americas
Uneasy calm returns to Bolivia
14 Feb 03  |  Americas


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