Following on from Ecuador's path-breaking precedent, Bolivia will set up a commission to audit external debt to assess the legitimacy of past loans. Bolivia's current heavy debt load dates back to periods of dictatorship when loans were borrowed without public consent.

Last month Bolivia followed in Ecuador’s footsteps as the second country to commission an audit of their external debt. The Bolivian Parliament approved the commission to investigate the history of the country’s debts – where the loans came from, how, and by whom.

Bolivia’s debt amounted to $ 2.8 billion by September 2009, a $316 million increase from 2008.  Much of this debt originated from periods of dictatorship in which the country borrowed without the people’s consent.

Eurodad writes:

The communiqué specifies that the audit should determine the “legitimacy, lawfulness, transparency, quality, effectiveness and efficiency” of debt processes and debt cancellation processes registered in Bolivia in recent decades.
    
Indebtedness levels “continue to be alarming” in spite of debt cancellations. Furthermore, they stated that economic and social development projects and programs funded with external resources have failed “to reduce the high levels of poverty and inequality” in the country.

The results from the audit of past indebted practices should encourage future policy recommendations for more responsible external indebtedness.
 
For many years, Jubilee supporters have called for debt audits as a fair and just way to see if loans are odious or illegitimate. Late last year, Bolivia’s neighbor Ecuador completed the first official government debt audit and decided not to service parts of a loan it deemed illegitimate.

The original story is published here.