Bolivia Seeks Debt Relief From IDB

By ALAN CLENDENNING AP Business Writer
(c) 2006 The Associated Press

BELO HORIZONTE, Brazil — Bolivian President Evo Morales headed to a key economic forum Sunday to press the Inter-American Development bank
to forgive at least some of the $3.5 billion owed by the Andean nation and four other poor Latin American countries.

But Latin America's two biggest powerhouses _ Brazil and Mexico won't support the debt relief package for Bolivia, Haiti, Honduras, Guyana and Nicaragua unless richer nations foot the bill, Brazilian Planning Minister Paulo Bernardo told reporters.

"This has to be talked about and negotiated because the question is, `Who is going to be responsible in financial terms?'" Bernardo said on
the sidelines before the IDB's annual meeting.

Bolivian Finance Minister Luiz Alberto Arce said Morales, a leftist and Bolivia's first Indian president, will push for the debt relief package at the event for top Latin American and Caribbean economic officials in this southeastern Brazilian city.

Morales was expected to arrive in Belo Horizonte late Sunday and attend the event's official opening ceremony on Monday.

Arce did not say how much IDB debt Bolivia would seek to have forgiven, but the proposal is sure to be a major theme at the meeting, which ends Wednesday. Bolivia owes $1.6 billion, and Bernardo said Bolivia wants all of its obligations forgiven.

The 47-nation bank is owned by its member countries, mainly from the Western Hemisphere, but also including some from Europe, as well as
Japan and South Korea.

Mexico supports the debt relief idea but doesn't want to pay for it through its IDB ownership stake, said Mexican Finance Minister Francisco Gil.

Both he and Bernardo suggested that the United States and other rich countries _ possibly European _ should foot the bill.

Delegates at the meeting agreed Sunday to form a special committee chaired by Brazil that will be charged with coming up with a financing solution for a debt relief package by the end of the year, said Clay Lowery, the Treasury Department's assistant secretary for international affairs.

Lowery said the U.S. delegation is proposing a complicatedly structured financing arrangement that will lead to debt relief while not negatively affecting the IDB's balance sheet.

"We think it can be done in a way that is a win-win situation for the IDB, all its member countries, and the entire region," said Clay Lowery, the Treasury Department's assistant secretary for international affairs. He did not provide details.

On Friday, the World Bank relieved Bolivia of $1.5  billion in debt. Another prickly topic expected to come up on the sidelines of the meeting is Bolivia's plan to nationalize its vast natural gas resources and how that will affect Petroleo Brasileiro SA, Brazil's state-owned petroleum company.

Morales won the presidency last year after campaigning on a platform to wring greater profits from the gas producers doing business in Bolivia. Petrobras is a major producer in Bolivia, where production was privatized in the 1990s, and Brazil is Bolivia's biggest gas client.

But Petrobras Chief Executive Sergio Gabrielli said months of negotiations over the company's future in Bolivia haven't resulted in an understanding over what nationalization means. Gabrielli told reporters he hopes to meet with Morales.

Delegates at the IDB meeting, one of Latin America's most important annual economic forums, were also discussing how the bank can improve the region's crumbling infrastructure, boost economies and promote regional integration.

Luis Alberto Moreno, a longtime Colombian ambassador to Washington elected last year to a five-year term as head of the bank, is overseeing the meeting for the first time.

Moreno wants to maintain the Washington, D.C.-based bank's role as a key source of funding for government projects while expanding loans to
the private sector. He also advocates small-scale Latin American development projects for the region's poor that can serve as examples for more expensive efforts.