BOLIVIAN DEBT BUYBACK PLAN GAINS GROUND
Bolivia's proposal to repurchase at a
deep discount the 900 mln dlrs it owes to foreign commercial
banks is likely to be accepted, central bank governor Javier
Nogales Iturri said.
    Speaking to reporters at the annual meeting of the
Inter-American Development Bank (IADB) here, Nogales said
Bolivia's bank advisory committee, led by Bank of America, is
seeking permission from creditor banks worldwide to go ahead
with the scheme. More than 50 pct of the banks must give their
approval, and Nogales said he is confident that this threshold
will be reached.
    "It's working out very well, and I think we'll get clear
majority," Nogales said.
    A senior banker working on the deal also said that banks
are responding positively and said all the legal waivers
necessary could be obtained within two months.
    Bolivia halted all payments on its commercial bank debt in
March 1984. Hyperinflation has been curbed and public spending
trimmed, but its debt is still trading as low as 10 cts on the
dollar on the secondary market and many banks have written off
most, if not all, of their loans to the country.
    Bankers see little chance for a substantive recovery in
Bolivia's economic fortunes and so are willing to collect what
they can on the loans.
    Nogales said Bolivia would offer to buy back the debt at a
market price. He said some banks might want to hold out for a
higher price, but others would see the repurchase offer as a
window of opportunity to cut their losses.
    Bolivia intends to pay for the repurchase with aid that
foreign governments, especially the United States and West
Germany, are providing to help finance the eradication of coca
crops. Cocaine, although illegal, is Bolivia's largest export.
    The campaign to persuade farmers to grow legal crops
instead of coca would be financed instead using local currency,
Nogales said.
    Because the fiscal deficit has been reduced to some four
pct of gross domestic product, money supply could be increased
to pay for the drug-eradication drive without too much of n
impact on inflation, he added.
    Nogales said he did not expect Bolivia's debt repurchase to
become a model for other debtors in dire straits. "We're not
seeking a universal solution," he said."             
 Reuter
