Spain writes off Bolivia debt

By Jorge Sainz, Associated Press Writer

Spain writes off Bolivia bilateral debt of euro60 million to help country's development

MADRID (AP) -- Spain on Tuesday agreed to write off Bolivian debt of euro60 million ($87 million) to help the impoverished South American country's development.

Prime Minister Jose Luis Rodriguez Zapatero said 60 percent of the debt would be forgiven outright, while 40 percent would go toward funding education projects.

"It's a gesture by Spain toward Bolivia's development, toward young people who have no schools or have difficulties finding decent schooling, Bolivians who have no access to water or health care services," Zapatero said during a press conference with visiting Bolivian President Evo Morales.

During their talks, the two also discussed the possibility of increased Spanish investment in Bolivia's energy and mineral sector.

Bolivia plans to nationalize its electricity sector and this is likely to affect some Spanish companies.

Zapatero said Spain was not asking for anything in return for the debt pardon, but he immediately went on to say he trusted Spanish companies would be able to operate with full guarantees in Bolivia.

Morales has met King Juan Carlos as well as parliamentary group leaders since arriving Sunday. He also met with the head of Spain's energy giant Repsol.

Morales has said Bolivia welcomes foreign investment in its energy sector but without foreign companies acting as owners. He said the country's relations with Spanish energy companies were excellent. Bolivia nationalized its hydrocarbons sector in 2006.

Zapatero said the two countries also signed an accord under which Bolivians and Spaniards residing in each other's country could vote in municipal elections.

On Sunday, Morales addressed a rally of around 2,000 mainly Bolivian supporters in Madrid -- he faces elections at home in December -- and vowed to defend immigrants' rights.

Some 220,000 Bolivians live in Spain.

Morales was to return to Bolivia later Tuesday.